Breedon Group enjoys a strong performance reaching the end of 2023

Trading performance

The group has delivered a strong performance to October 2023, enabled by the resilient vertically integrated business model and first class team. Robust pricing and operational excellence more than offset the effect of moderating volumes.

When compared to the same period in 2022, revenue for the first ten months increased 8% and revenue for the four months to 31 October increased 4%. On a like-for-like basis, revenue grew 5% in the first ten months, or 1% for the four months to 31 October.

As expected, changes to building regulations in the UK that took effect in June impacted ready-mixed concrete volumes. Aggregate and asphalt volumes have continued to moderate. However, pricing has been sustained and the company has maintained tight control over its cost base.

Breedon continues to generate good free cash flow and is on track to deliver a further reduction in covenant leverage at the year end, providing financial flexibility to continue to invest for growth.

Highlights

• The GB business remained focused on self-help actions to mitigate the impact of a softening market, delivering the operational excellence programme implemented in the first half. Surfacing completed a number of aviation projects and it continued to be well represented on National Highways work.
• In Ireland, market dynamics were unchanged with tendering in the Republic of Ireland underpinned by long-term structural growth drivers and healthy budgets. Meanwhile, the pipeline in Northern Ireland was impacted by the ongoing lack of a governing assembly. The integration of Robinson Quarry Masters, which completed in the first half, continues to progress according to plan.
• The cement business maintained a robust performance in GB and Ireland. The Hope plant completed its second scheduled kiln shutdown on time and on budget. The Kinnegad Cement plant maintained its world leading performance with alternative fuel substitution in excess of 80%.
• The company continues to make progress in respect of its sustainability priorities; the Breedon Balance range of products is gaining traction and the group continued to reduce the clinker content of its cement. The results of its 2023 colleague engagement survey showed pleasing increases in both participation and engagement.
• Following the move to the Main Market in the first half, the group is pleased to enter the FTSE 250 index during September.

Outlook

The group has delivered a strong performance in the year to date, as a result of which it is now expecting to achieve full year 2023 underlying EBIT ahead of market consensus.

In the UK, the latest CPA Autumn report forecast continues to show a soft construction outlook driven by low levels of housing activity. In the Republic of Ireland, the large budget surplus and falling debt burden enabled further commitments to infrastructure spending and housebuilding in Budget 2024.

Due to the macroeconomic landscape, visibility in the construction materials sector remains limited in the short-term, particularly in Great Britain, offset by long-term structural growth drivers in infrastructure and housebuilding. Consequently, the group continues to focus on self-help, executing operational and commercial excellence programmes while pursuing opportunities in its healthy M&A pipeline.

Rob Wood, Chief Executive Officer, commented:

“Notwithstanding the market backdrop, the Breedon team continues to deliver and we are delighted to report a trading performance ahead of expectations. Against the uncertain political and economic backdrop, our teams have adapted well to deliver a compelling performance, whatever the prevailing market conditions.

“Our strategic focus on ensuring Breedon is a great place to work, taking care of our people and the communities around our sites, has once again been reflected in both our financial performance as well as our colleague engagement, of which I am particularly proud. But we never settle – we will continue to seek ways to operate as efficiently and sustainably as possible, invest in our people and grow our business so we are positioned to succeed when the construction materials market returns to growth.”

Read the article online at: https://www.worldcement.com/europe-cis/22112023/breedon-group-enjoys-a-strong-performance-reaching-the-end-of-2023/