Polypipe lowers guidance amid tough trading conditions
Polypipe Group updated the market on its trading for the 10 months ended 31 October on Tuesday, reporting “resilient performance” in tough markets, with group revenue 4.3% higher at £381.7m.
The FTSE 250 company said its operating margin was 30 basis points higher, driven by margin-accretive acquisitions and strong cost controls.
It also reported continued good contribution from its acquisitions, which were said to be performing well, while its mergers and acquisitions pipeline remained “encouraging”.
Trading in the last four months reflected its strong 2018 comparatives and the short-term political and economic uncertainty impacting its markets, the board claimed, with group revenue 1.7% higher than the prior year.
Since the end of October, however, that had been compounded by flooding and poor ground conditions, most notably in the North and the Midlands, meaning contractors and developers had not been able to access sites for civils and groundworks activities.
Against that backdrop, the board said it now expected underlying operating profit for the year to be just below its previous expectations.
The group remained highly cash-generative, it added, and the long-term fundamentals of our markets remained “robust”.
“Despite increasingly challenging market conditions and the impact of the recent severe weather, we still expect to report good growth in profits, albeit just below our previous expectations,” sahd chief executive officer Martin Payne.
“Fundamentals in the group's markets remain strong, with a structural housing shortage, historically low interest rates, real wage growth and near full employment which means that we view our future prospects with confidence.”
At 0841 GMT, shares in Polypipe were down 3.06% at 461.8p.