Breedon Group shares trading update

Trading performance

• Group revenue of £1045 million up 31% versus the same period in 2019
• Like-for-like¹ revenue increased 15% on the same period in 2019
• Positive margin performance reflects dynamic pricing and cost recovery actions
• Layered hedging policy continued to mitigate key commodity cost pressures

Breedon has continued to benefit from strong end markets, with demand levels remaining encouraging across the Group. Trends evident in the first half have persisted with momentum in residential housebuilding and infrastructure spending continuing to drive volume growth. Ireland continued to gain traction during the second half following the lifting of Government restrictions on non-essential construction.

Pricing actions have increasingly reflected the dynamic cost environment and Breedon’s layered hedging policy has delivered visibility of energy and carbon costs. As indicated in July, allowing for the natural lag to implement price adjustments, the company has secured full cost recovery in the second half, leading to margin improvement.

Underlying EBIT² performance for the 2021 full year will now be stronger than Breedon expected and, assuming no adverse weather events, the company will be slightly above the upper end of the range of market expectations*.

Financial position

Cash generation has remained strong and the Group has continued to degear, assisted by lower levels of capital expenditure. Breedon’s two-year capital investment plan, with its emphasis on sustainability linked projects, is unchanged and amounts to £170 million over 2021 and 2022. However, Breedon now expects that CAPEX for 2021 will be £70 million with the balance deferred into next year, principally as a result of extended procurement lead times.

Outlook

The recovery that Breedon experienced in the first half of 2021 has been sustained, with supply chain disruption managed effectively by local teams who have stayed close to their customers and suppliers. While the dynamic cost environment is likely to persist into 2022, the medium-term outlook for end markets and demand levels remains encouraging, with both the UK and Irish Governments committed to material long-term spending plans for construction.

Notes:

1. Like-for-like reflects reported values adjusted for the impact of acquisitions and disposals.

2. Underlying EBIT is stated before acquisition-related expenses, redundancy costs, property gains and losses, amortisation of acquisition intangibles and related tax items.

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