Construction materials outfit Breedon (BREE:AIM) helped stem a tough recent run for its share price with a strong set of annual results which were accompanied by a robust outlook and plans for US expansion.
Breedon is the UK’s leading aggregates play. Aggregate is a term given to material frequently used in construction as a means of stabilising and reinforcement and includes items like sand, gravel and concrete.
Revenue was up 33% in 2021 on both 2020 and 2019 levels while pre-tax profit was up 138% on last year and 21% on pre-pandemic levels.
This was underpinned by record volumes as the company in its own words supplied ‘more material to our customers than ever before’.
The company also unveiled a maiden dividend of 0.5p alongside its first half results last July and this will be topped up by a further 1.1p announced today.
‘EXCITING OPPORTUNITIES’
This reflects strong cash generation and a solid balance sheet, with net debt reduced from £318.3 million to £212.5 million year-on-year.
CEO Rob Wood referenced ‘exciting opportunities’ ahead and the potential for ‘bolt-on’ acquisitions as he highlighted the decision to appoint a business development director in the US.
Numis analyst Christen Hjorth commented: ‘Breedon has reported EBIT (earnings before interest and tax) that is modestly ahead of our forecast (following two upgrades in the year), and another impressive performance on net debt. Looking forward, the group points to a robust demand environment.
‘Furthermore, whilst commodity cost volatility continues, Breedon is becoming increasingly dynamic around pricing with input costs expected to be fully recovered (mitigated by a successful hedging policy).’
