REG - Breedon Group PLC - November Trading Statement

BreedonAnnouncement

22/11/2023 07:00

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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)
(https://www.breedongroup.com/investors/analysts-and-consensus-estimates) ;
FY23 consensus mean Underlying EBIT including associates and joint ventures is
£147.6m.

 

 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
 MHP (Public relations adviser)                   +44 (0) 20 3128 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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