Polypipe brushes off Brexit fears to deliver record results

The Doncaster-based company achieved a strong rise in sales and profits in 2016 and expects to make further progress this year.

Polypipe, which manufactures plastic piping and ventilation systems for the residential, commercial, civils and infrastructure sectors, said the level of economic uncertainty has eased since the immediate reaction to the outcome of the EU referendum. However, the company remains “alert to market risks”.

In 2016, Polypipe’s revenue rose by 23.8 per cent - or 9.1 per cent on a like-for-like basis - to £436.9m and the firm’s underlying operating profit was 28.0 per cent higher at £69.4m. UK revenue was 10.5 per cent ahead on a like-for-like basis.

Polypipe said its excellent UK revenue growth reflected continued strong demand for its products “with no discernible impact of the EU referendum on our end markets”.

Polypipe said the “underlying fundamentals and growth prospects” in the overall UK construction market remained positive.

Commenting on the results, David Hall, the chief executive, said: “Our record performance during 2016 and continuing growth underscores the strength of the Polypipe business model and the robust fundamentals underlying the majority of our market segments.

“In a period of heightened political and market uncertainties, Polypipe continued to focus on its priorities and delivered results toward the top end of our expectations.

“The combination of forecast market growth, our focus on executing our strategic development initiatives and resolve to recover input cost inflation mean that we look forward to 2017 being a further year of progression for the group”.

Mr Hall told The Yorkshire Post that Polypipe was “always on the lookout” for acquisitions but nothing was imminent.

The company, which employs more than 3,000 people, secured a significant boost to its technical capability in the ventilation market through the £144.3m acquisition of Nuaire in August 2015.

The company said Nuaire was successfully integrated into the group and performing in line with expectations. The company’s Dubai manufacturing plant was in full operation in the second half of the year.

Polypipe’s export revenues also grew by 28.7 per cent.

Analysts from Deutsche Bank said Polypipe’s outlook tone was more confident than expected.

Deutsche Bank added: “We see Polypipe’s 2016 results as robust. Whilst the key metrics have been reported in line to marginally ahead of forecasts, we see the biggest takeaway as the confident outlook (more upbeat than we anticipated) against continued macro uncertainty. Of particular note is management’s confidence in passing through cost inflation in pricing, which is expected to drive flat to slightly higher margin in 2017 vs 2016.”

Analysts from Peel Hunt added: “Polypipe has reported strong full year results. There is a positive outlook for the group’s end markets, with the strong trading at the end of 2016 carrying through to the new year.

“New build residential, commercial and infrastructure are particular areas of strength.”

Peel Hunt said the UK was the main driver of the group’s performance.

The note added: “In the commercial and infrastructure end markets, LFLs (like-for-likes) were ahead by 16.1 per cent with good road infrastructure activity and the Nuaire business performing strongly. The European business, primarily in France, remains relatively small and marginally profitable with operating profit of £1.3m.”

POLYPIPE joined the London Stock Exchange’s FTSE 250 Index last year, just under two years after its flotation.

Analysts at Applied Value said: “Polypipe has had a very successful return to the quoted arena.”

Applied Value also said the deal to buy Nuaire, a specialist in heating and ventilation mechanisms, had proved to be a very sound move.