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Breedon Aggregates well placed to profit from infrastructure spending

Breedon delivered higher first-half sales despite a flat market, and the Hope acquisition looks set to boost profits further
July 21, 2016

Breedon Aggregates (BREE) may look like a slow burner, but it's important to remember that it has over half a billion tonnes of aggregate reserves held in more than 50 quarries across England and Scotland, and that's without including more than 60 ready-mixed concrete plants and nearly 30 asphalt plants. And with completion of the Hope Construction Materials acquisition expected in August, this will increase to nearly 200 ready-mixed concrete plants and about three-quarters of a billion tonnes of reserves.

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Despite uncertainties generated ahead of the referendum, Breedon increased its underlying earnings in the six months to June by 21 per cent to £22.8m, while its preferred performance metric, underlying margins, grew from 11.8 per cent to 14 per cent. The first half included winning its largest ever contract in Scotland, valued at up to £55m as part of a £745m project for a road round Aberdeen. And, despite relatively subdued market conditions, work on several new projects was secured in England. All in all, 4.6m tonnes of aggregates were sold, up from 4.5m a year earlier.

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