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Sat August 08 2020

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Breedon sees revenues return as markets revive

29 Jul Building materials producer Breedon Group made a pre-tax loss of £10.1m in the first half of 2020 due to much of the UK construction industry shutting down in April.

Breedon furloughed more than 80% of its staff during April but began reopening sites in May.

By the end of June, 90% of its sites were back open, including both cement plants, with 82% of employees back at work.

For the first six months of 2020 Breedon’s revenues were down 25% on the previous year to £335.3m (2019 H1: £447.4m). Last year’s £39.5m pre-tax profit became a £10.1m loss this time.

Until the back end of March, all was going well. The lockdown happened, to prevent the spread of the Covid-19 virus. Revenues in April were just 19% 2019 levels, climbing up to 45% in May before rebounding to 99% in June.

Scottish operations remained subdued until well into June, though, due to the delayed lifting of restrictions by first minister Nicola Sturgeon.

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Group aggregates volumes for the half-year totalled 8.0m tonnes (2019: 9.9m tonnes); asphalt volumes reached 1.0m tonnes (2019: 1.4m tonnes); ready-mixed concrete volumes were 1.0m cubic metres (2019: 1.5m cubic metres); and cement volumes were 0.8m tonnes (2019: 1.0m tonnes).

Group chief executive Pat Ward said: “Following the encouraging performance of our businesses in the first 12 weeks of the year, the move into lockdown and immediate fall in demand in the latter part of March led us into a swift and managed shutdown of the majority of our operations, leaving open only those which were servicing critical needs. This decisive action ensured the protection of our employees, left our sites in a safe condition and also positioned us to return quickly to production when demand began to return in early May.

“The near-term outlook for our business is clearly dependent on the speed at which demand from our customers recovers and we return to more normal levels of activity. We are encouraged by recent announcements from a number of contractors, housebuilders and merchants which broadly point to a steady improvement in trading conditions in the UK, whilst in Republic of Ireland the market has returned to near pre-Covid-19 levels of demand. We have demonstrated that we can reopen sites very quickly in line with increased demand, enabling us to continue responding almost instantaneously as our markets recover.”

He concluded: “The recovery in our markets now appears to be well underway, and we have seen continued improvement into July. The great majority of our sites are now open, including both our cement plants. While near-term uncertainty remains, there is significant pent-up demand to be satisfied in both housing and infrastructure, reinforced by the substantial programme of investment confirmed by the chancellor earlier this month. Looking to the longer-term, we believe the outlook for our markets remains positive, supporting our confidence in the prospects for the group.”

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