Breedon Aggregates, the building materials group, is confident of continuing progress made in the first half of the year despite not holding out much hope of a recovery in construction output in the near future.
The firm said overall construction activity declined by four per cent in the first three months of 2012 and the second quarter is expected to have shown a further decline.
Underlying operating profit in the six months to June 30th climbed to £3.9m from £2.9m, while revenues fell to £83m from £84.7m the previous year.
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Underlying profit before tax tripled from £0.77m to £2.2m and basic earnings per share rose from 0.12p to 0.28p, helped by falling costs, higher selling prices and careful selection of activities. These also helped improve earnings before interest, tax, depreciation and amortisation by 1.8 points.
Reported profit before tax was £2.73m, boosted by a positive contribution of £0.57m from one-off items, including £0.64m relating to the release of a provision for environmental and planning purposes. Last year's reported profit before tax at the interim stage was £0.42m.
The group said it is reducing its historic dependence on the public sector in Scotland. Business in London has been buoyant while activity in the Midlands has benefited from increased investment in the industrial and commercial sectors, together with a recovery in house building activity.
However, the general outlook for construction in the UK continues to be affected by Eurozone worries and reduced public sector spending, the group noted.
The Executive Chairman Peter Tom noted that the proposed Tarmac-Lafarge joint venture was approved by the Competition Commission in May, subject to certain disposals being made, and that divestment process is now under way. In the meantime, the company is looking at a number of potential acquisition opportunities.
Referring to the joint venture, Tom said: "As previously stated, the board will carefully assess this opportunity to determine whether additional value can be created for shareholders; however, our core strategy of organic improvement supplemented by bolt-on acquisitions remains very much on track and will continue to drive future earnings growth.
"Whilst we do not expect any significant recovery in construction output in the short term, the business has performed well in the first six months of 2012 and we are confident of making further progress in the second half."
The share price rose 2.15% to 23.75p by 12:43.
NR
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