Monday, Mar 21 2016 by

I have posted several fragmentary pieces about this company and hope to find time to do a more comprehensive write up in the near future. Until then my apologies for the fragmentary nature of related posts. 


Breedon sells bulk materials to the construction industry. It has grown from a market cap of 2 million to a market cap of 800 million in a short time. It is a growing business with a small market share in a growing market, so there is lots of head room. Its strategy includes organic growth plus consolidation of smaller players. Every one of its past acquisitions has delivered more than was expected/identified at the time of acquisition. It is currently waiting on regulatory approval for its biggest acquisition to date - Hope - and that should come through within the next fewmonths. There is a pipeline of further acquisitions in the offing. Margins have been raised from 9 to 12% in the past year and are expected to reach 15% in a few years.

There are a number of obvious risks (market downturn etc )and I'll go into them when I do a fuller write up. 

Reason for this post 

BREEDON AGGREGATES (BREE) have posted onto their website a copy of the slides used in a presentation to analysts on March 9 – see Breedon slides ,

together with an audio recording of the presentation and the subsequent Q&A session – see Breedon Audio

The audio is 55 minutes long and in combination with the slides it covers a lot of material. I listened to it at 3am the other day when I was suffering from insomnia during a recent illness. Can’t guarantee I did not nod off and miss things, but did my best to take notes of the points that stood out and thought I'd share.

Here are my notes in bullet point format. 

Note 1: market cap is 800 million

Note 2: Breedon’s market share is 5-8% of the UK total market depending on product range

Conference call

P Tom chairman

• v pleased with past year

• record results in terns of revenue, profit, margin

• margins increased by 3% to 12%

• well on target to reach 15% margin by 2020

• useful review of highlights

• acquisition of Hope was stand out event (acquisition has been agreed but is currently under review by the competition regulator – review completion due Q2 this year

Rob Wood FD

• review of financial highlights

• eps +63%

• net cash/debt at y/e improved by £76 million

• note cash/working cap at high levels only temporarily pending completion of Hope Acquisition

• strong growth in EBIT

• England 68%
• Scotland 39%
• total 56%

• consensus infrastructure spending upward trend over medium term

• market expected to increase +57% by 2019

• every one of Breedon’s past acquisitions > expectations

• growth in 2016 < 2015


• CMA process expected to end Q2

• pre-integration planning in progress at both companies

• synergies identified = £10 million pa


• Further pipeline of bolt on acquisitions


• Management will be disappointed if no further acquisitions announced by autumn

Filed Under: Momentum Investing,


The author may hold shares in this company. All opinions are his own. You should check any statements that appear factual and seek independent professional advice before making any investment decision.

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Breedon Group plc, formerly Breedon Aggregates Limited, is an independent construction materials company. The Company's operations include a cement plant, two cementitious import terminals, approximately 60 quarries, over 30 asphalt plants, over 200 ready-mixed concrete plants and three concrete products plants. Its segments include Breedon Northern, Breedon Southern and Hope Cement. It supplies a range of cementitious products, crushed rock, sand and gravel, asphalt, ready-mixed concrete and mortar, as well as concrete products and contract surfacing services. Its contract surfacing business comprises road surfacing and maintenance projects, from road networks to car parks, domestic driveways and farm access roads. It produce a range of concrete walling and paving products, blocks and pre-stressed T-beams from its factories in England and Scotland. Its asphalt products are used in various applications, from roads to airport runways, car parks, sport surfaces and domestic driveways. more »

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1 Post on this Thread show/hide all

Richard Goodwin 26th Mar '16 1 of 1

I have shares in Breedon but it's acquisition led style does make me nervous! The high stock rank and view that infrastructure spend is likely to remain strong covinced me to buy and so far ie has been v successful.
Like other acquisition fueled companies it relies on getting out before the cyclical peak.

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