Polypipe reports strong growth

Polypipe's chief executive David Hall is stepping down in October.

The Doncaster-based group also announced that chief financial officer Martin Payne is to take over as chief executive when David Hall steps down in October.

Revenue for the four months to April 30 rose 6 per cent to £157.8m and like-for-like sales increased 4.6 per cent.

The UK business reported growth of 4.8 per cent, although the group said the underlying performance was stronger because of the way price increases affected merchant buying patterns. Last year demand was pulled forward into April 2016 because of imminent price increases at that time and again into December 2016 as a result of imminent price increases in early 2017.

Revenue in the UK residential business jumped 7.1 per cent following strong demand from housebuilders, particularly for underground products helped by the mild winter.

The UK commercial and infrastructure division delivered growth of 3.4 per cent, despite very strong comparables and delays in the timing of new road projects.

The group said UK operating margins are in line with expectations and slightly lower than the prior year. It said it is benefiting from price increases to cover polymer and other inflationary costs seen in the second half of 2016.

In mainland Europe, revenue leaped 14 per cent boosted by the weak pound. On a constant currency basis it rose 4.2 per cent. Polypipe said the general economic environment on the Continent appears to be improving and this performance represents good progress. It said the business continues to be profitable but at lower margins than the UK.

Analyst Graeme Kyle at Shore Capital said: “The strongest growth was observed in UK residential systems, but this appears to have been enhanced by the mild winter with housebuilders able to lay underground pipes throughout most of the periods.

“Nonetheless this does demonstrate that revenue growth would likely benefit from an acceleration in new housebuilding, as promised in the Conservative election manifesto. Management state that UK margins have fallen year on year due to higher imported polymer costs (not unexpected by investors) but are in line with its expectations and selling prices are rising to recover these higher costs.”

Chief executive David Hall said: “We continue to deliver good organic growth through our long-term structural drivers of legacy material substitution, legislative tailwinds in water management and carbon efficiency, and development of selected export markets.

“I am encouraged by our progress in recovering cost inflation to date, and whilst we remain alert to the potential effects of economic and political uncertainty on our markets, we continue to believe the group is well placed to achieve management expectations for the full year.”

Mr Hall has been the chief executive at Polypipe since 2005 and the group said he has played an integral role in the firm’s growth and development, including its successful listing on the London Stock Exchange in 2014.

Mr Payne has been the chief financial officer at Polypipe since May 2016. Previously, he was group finance director at Norcros, a supplier of branded showers, taps and bathroom accessories. He is a fellow of the Chartered Institute of Management Accountants and his previous experience includes holding senior positions at JCB, the construction equipment manufacturer, and at IMI, the British-based engineering company.

Following the board changes, Glen Sabin will take up the newly created position of chief operating officer in October. He will be responsible for the operations of the group, reporting to Mr Payne, and will sit on the board.

Mr Sabin has been a member of the executive committee since 2005, most recently as divisional head of Polypipe’s UK plumbing and drainage businesses since January 2014 and prior to that as managing director of its civils business from 2004. He has 40 years’ experience in the construction sector starting as an engineer with George Wimpey and spent 22 years at Marshalls.

A process to appoint a replacement chief financial officer is underway. Mr Payne will continue to oversee the finance function until a permanent successor is appointed.

Polypipe’s chairman Ron Marsh said: “David has played a pivotal role in building Polypipe into the successful business it is today and, on behalf of the board, I would like to thank him for his invaluable contribution to the business and wish him the very best for the future. The board conducted a thorough search for his successor, using third party advisers and including external candidates, and agreed that Martin was the outstanding choice.

“His leadership, financial and operational skills, together with his significant experience of public markets and manufacturing of building products, are a great asset to the Company. In Martin and Glen we have a very high calibre leadership team to take Polypipe forward.”

Mr Hall said: “It has been a huge privilege to lead Polypipe over the past 12 years through both private ownership and a successful stock market listing in April 2014. I am extremely proud of the people within Polypipe and what they have achieved and am confident that shareholders can continue to rely on their capability and enthusiasm going forward. I am delighted that the board has decided that Martin should succeed me as CEO and that Glen will join the board as COO. Together they have deep knowledge of the business and the industry, possessing the skills and expertise to drive the future development of Polypipe.”

Mr Payne said: “We have talented and committed people across the group and I am excited to be working with them to build on the success achieved over recent years.”