Breedon suspends production at UK sites

Breedon, a major independent building materials group, has temporarily suspended production at its UK sites, with the exception of its Hope Cement plant and those parts of its operation serving crucial supply needs.
Quarry Products / March 26, 2020
By Guy Woodford
Breedon Group’s Breedon-on-the-Hill Quarry pic: Breedon Group

The Leicestershire, central England-headquartered business took the decision in response to the continuing COVID-19 pandemic.

A group statement read: "During the course of this week we have begun gradually winding down the relevant sites, whilst ensuring that they are in a condition to be quickly and safely brought back online at the appropriate time.

"Our operations in the Republic of Ireland, including our cement plant at Kinnegad, continue to operate pending further guidance from the Irish Government.

"We welcome the introduction of the UK Government’s Coronavirus Job Retention Scheme, which should ensure that our UK colleagues continue to receive a proportion of their pay during a period of furlough."

Breedon's trading performance in 2020 was until this week broadly in line with its expectations. However, following the more stringent measures introduced by the UK Government on 23 March, the group said there had been an "immediate and significant reduction in demand for our products" which it expected to continue until restrictions on movement are relaxed.

The statement added: "The group is well invested, which has enabled us to immediately restrict capital expenditure solely to committed and critical projects without compromising the longer-term performance of our operations.  In addition, we have halted all discretionary expenditure and continue to apply robust discipline to our management of working capital. We will make full use of any government support, including tax reliefs and other forms of financial aid, as they become available."

Completion of Breedon's acquisition of certain CEMEX UK assets remains subject to satisfactory conditions being met, including a TUPE consultation and IT migration. In light of COVID-19, Breedon says completion may take longer than originally anticipated.

In light of the restrictions relating to COVID-19, the Brredon board has agreed to defer the 2020 AGM to a later date.

Commenting on the business outlook for Breedon, the group statement concluded: "Given the current economic uncertainty and the as yet unquantifiable longer-term impact of COVID-19 on our trading environment, we are unable to provide accurate market guidance for the current year. However, looking further ahead, we have a fundamentally robust and diversified business with traditionally strong cashflow characteristics, and are well positioned to prosper in the long term.  The pending addition of a high-quality portfolio of assets from CEMEX in the UK will further strengthen our position."