Construction materials group Breedon has doubled its overall revenue despite a decrease in its underlying EBIT margin, its unaudited half-year financial results have shown.
The group generated revenue of £326.3 million, up from £163 million for the same period in 2016, with profits before tax of £31.2 million compared to £20.9 million last year.
Underlying earnings before interest and tax (EBIT) increased by 57% to £35.8 million, up from £22.8 million in 2016. However, the underlying EBIT margin decreased from 14% to 11%. Breedon attributed this to the lower margin delivered by the former Hope Construction Materials business and the phased shutdown of the group’s kilns for annual maintenance and upgrade.
The group highlighted “strong profit improvements” from its former Breedon Aggregates business. The underlying EBIT margin delivered by the former aggregates business was 15.8%, ahead of the group’s 2020 target of 15%.
Peter Tom, CBE, executive chairman, commented, “I am pleased to report that in the first half of 2017 the former Breedon Aggregates business posted a strong profit improvement and the former Hope Construction Materials business made a robust contribution, even after taking into account the shutdowns of both our cement kilns for planned annual maintenance and upgrade during the first half, which were completed on time and to budget.
“Although the outcome of the General Election, coupled with the commencement of Brexit negotiations, have created some further uncertainty for the UK economy, the outlook for UK construction remains encouraging. It is reassuring that the Government’s direction of travel appears to be moving away from continued austerity towards fiscal stimulus, which can only be helpful to our industry.”
He continued, “We have consistently demonstrated our ability to generate value for our shareholders irrespective of economic conditions, through flexible and imaginative customer service, rigorous cost control, focused investment and a culture of continuous operational improvement. These disciplines, coupled with a strong balance sheet and healthy cashflow, put us in a strong position to take advantage of future growth opportunities, both organically and through further bolt-on acquisitions.
“More immediately, our performance in the first six months and our prospects for the second half give us confidence that we will meet 2017 market expectations.”