Breedon says it has continued to benefit from strong end markets, with demand levels remaining encouraging across the group. Trends evident in the first half have persisted with momentum in residential housebuilding and infrastructure spending continuing to drive volume growth. Ireland continued to gain traction during the second half following the lifting of Government restrictions on non-essential construction.
The group adds that pricing actions have increasingly reflected the dynamic cost environment and our layered hedging policy has delivered visibility of energy and carbon costs.
"As indicated in July, allowing for the natural lag to implement price adjustments, we have secured full cost recovery in the second half, leading to margin improvement," the company said in a statement.
Breedon says that underlying EBIT [earnings before interest and taxes] performance for the 2021 full year will now be stronger than it expected and, assuming no adverse weather events, will be slightly above the upper end of the range of market expectations.
Cash generation has remained strong and the group has continued to degear, assisted by lower levels of capital expenditure. Its two-year capital investment plan, with its emphasis on sustainability linked projects, is unchanged and amounts to around £170m over 2021 and 2022. However, Breedon says it now expects capex for 2021 will be around £70m with the balance deferred into next year, principally as a result of extended procurement lead times.
In terms of outlook, Breedon says the recovery it experienced in the first half of 2021 has been sustained, with supply chain disruption managed effectively by its local teams who have stayed close to their customers and suppliers. It adds that while the dynamic cost environment is likely to persist into 2022, the medium-term outlook for its end markets and demand levels remains encouraging, with both the UK and Irish Governments committed to material long-term spending plans for construction.