A multi-million-pound buying spree helped pre-tax profits more than double at quarrying firm Breedon Aggregates during the first half of this year, with the company yesterday stressing that more investment is on the cards.
Turnover rose 25% to £125.2m during the six months to the end of June, while post-exceptional pre-tax profits leapt 108% to £9.1m including the full benefit of deals which saw Breedon take on assets from Aggregate Industries and Marshalls in a £53m double swoop in April last year.
The performance also includes a one-month contribution from Cotswolds-based Huntsman Quarries, which Breedon bought over in a £15m deal in early June. Profits would have been around £1.4m greater if the “excellent investment” had counted over the whole of the period.
The company said sales of aggregates had leapt 31% to 3.6 million tonnes, with ready-mix concrete climbing 15% to 326,000 cubic metres in the period, meaning the firm significantly outperformed the wider market.
Breedon also said its output had been helped by better weather conditions during the early part of the six-month period under review, with increased spending by Transport Scotland pushing the company to a particularly strong first quarter.
It also hailed the retention of the Government agency’s “strategically important” north-east trunk road maintenance contract by Bear Scotland, in which it holds at 37.5% stake.
Bear also won a bid for the equivalent contract in the north west of Scotland last year and has high hopes for the impact of the £745m Aberdeen Western Peripheral Route project, on which construction work is expected to begin next year.
The Derby-based group which has its Scottish headquarters at Ethiebeaton by Monifieth, and employs around 580 people north of the border also said it was pleased to have reached the end of a “drawn-out” competition investigation following its £34m acquisition of the Scottish assets of rival Aggregate Industries last spring.
The result announced in April means it is obliged to a sell a concrete plant and an asphalt plant in the Aberdeen area, and enter a price-control deal in the Inverness area, in the next six months in order to satisfy regulators. The firm said the ruling means it is now in a position to realise the additional profitability it had anticipated from the combination.
“Pleasingly we are now able to fully integrate the business, which has been operating as a commercially independent entity for the past year, and we expect to deliver synergy benefits in the second half of this year,” said the Breedon statement.
A spokesman said headcount across the enlarged business would not be reduced, but cost efficiencies would be made “from a combination of integrated pricing, optimal supply sourcing and general efficiency improvements”.
Breedon said it would continue to invest, internally and in new acquisitions, with capital equipment having been on its shopping list in the half-year.
“There are a number of acquisitions and internal investment opportunities under review, and we would anticipate further business development activity in the coming months,” it added.
The company entered a new four-year £100m bank facility in July.
Shares closed up 0.75p at 39.50p.