TIDMBREE
RNS Number : 1902U
Breedon Group PLC
22 November 2023
22 November 2023
BREEDON GROUP PLC
Strong performance to date
Outlook for full year 2023 ahead of expectations
Breedon Group plc (Breedon or the Group), a leading
vertically-integrated construction materials group in Great Britain
and Ireland, provides the following trading update for the ten
months to 31 October 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(1) 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 we have maintained tight control over our cost
base.
We continue to generate good free cash flow and are 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 we 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 while 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%.
-- We continue to make progress in respect of our sustainability
priorities; our Breedon Balance range of products is gaining
traction and we continued to reduce the clinker content of our
cement. The results of our 2023 colleague engagement survey showed
pleasing increases in both participation and engagement.
-- Following the move to the Main Market in the first half, we
were 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 we now expect to achieve full year 2023
underlying EBIT ahead of market consensus(2) .
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 GB, 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
our 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."
Notes:
1. Like-for-like reflects reported values adjusted for the
impact of acquisitions and disposals.
2. Company compiled consensus can be found on the Breedon IR
website Analysts & consensus estimates - Breedon
(breedongroup.com) ; FY23 consensus mean Underlying EBIT including
associates and joint ventures is GBP147.6m.
ENQUIRIES
Breedon Group plc +44 (0) 1332 694010
Rob Wood, Chief Executive Officer
James Brotherton, Chief Financial Officer
Louise Turner-Smith, Head of Investor Relations +44 (0) 7860 911909
+44 (0) 20 3128
MHP (Public relations adviser) 8100
Reg Hoare, Rachel Farrington, Charles Hirst breedon@mhpgroup.com
About Breedon Group plc
Breedon Group plc, a leading vertically-integrated construction
materials group in Great Britain and Ireland, delivers essential
products to the construction sector. Breedon holds 1bn tonnes of
mineral reserves and resources with long reserve life, supplying
value-added products and services, including specialty materials,
surfacing and highway maintenance operations, to a broad range of
customers through its extensive local network of quarries,
ready-mixed concrete and asphalt plants.
The Group's two well-invested cement plants are actively engaged
in a number of carbon reduction practices, which include utilising
alternative raw materials and lower carbon fuels. Breedon's 3,800
colleagues embody our commitment to 'Make a Material Difference' as
the Group continues to execute its strategy to create sustainable
value for all stakeholders, delivering growth through organic
improvement and acquisition in the heavyside construction materials
market. Breedon shares (BREE) are traded on the Main Market of the
London Stock Exchange and are a constituent of the FTSE 250
index.
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