Breedon Group upbeat on resilient trading performance

21st Nov 2024 08:46

(Sharecast News) - Breedon Group reported a resilient trading performance for the 10 months ended 31 October on Thursday, driven by robust pricing and operational excellence, despite a challenging construction market in Great Britain.

The FTSE 250 company said revenue increased 7% year-on-year during the period and by 11% over the last four months.

On a like-for-like basis, revenue declined 4% for the 10 months, and 1% for the four months to October.

The group highlighted an improved performance in Great Britain since the half-year and continued strength in its Irish operations, with both markets experiencing encouraging levels of forward enquiries.

Free cash flow generation remained strong, with Breedon on track to reduce covenant leverage further by year-end, enhancing its financial flexibility to support growth initiatives.

Key developments included progress in the integration of BMC, which delivered robust performance ahead of plan under Breedon's ownership.

In October, BMC completed its first acquisition as part of the group, purchasing a U.S.-based masonry and stone products manufacturer with annual revenue of about $9m.

The acquisition is expected to complement BMC's operations in Western Illinois.

Breedon's cement division meanwhile achieved significant operational milestones, completing a scheduled kiln shutdown and crusher replacement at its Hope facility on time and within budget.

Its Kinnegad plant maintained its position as a leader in alternative fuel usage, with substitution rates consistently exceeding 80%.

The group also advanced its sustainability agenda, with its carbon reduction targets validated by the Science Based Targets Initiative (SBTi).

Looking ahead, Breedon reaffirmed its full-year expectations, projecting underlying EBIT in line with market consensus.

The group said it anticipated healthier market conditions in 2025, supported by falling interest rates and increased political clarity, which could spur a housing-led recovery and continued infrastructure investment, particularly in Great Britain.

While market risks persisterd, Breedon said it expected 2024 to mark the low point for construction materials volumes.

"These are exciting times at Breedon - we now operate across three geographies, have built a first-class team, and are on track to deliver a further year of record revenue and operating profit," said chief executive officer Rob Wood.

"2024 has not been an easy year, particularly in GB where soft market conditions have been compounded by poor weather.

"But we have again proven the power of our vertical model, whatever the economic, political or environmental backdrop happens to be."

Wood said that although the company had "immense faith" in its people, assets and model, it was "always striving" to improve.

"At our Capital Markets Event today, we are announcing an evolution of our growth strategy, clarifying our priorities and refreshing our medium-term targets.

"Since our last Capital Markets Event in 2021 we have made significant progress."

At 0827 GMT, shares in Breedon Group were up 1.93% at 447p.

Reporting by Josh White for Sharecast.com.