Doncaster-based Polypipe reports a “resilient performance” in face of flooding

POLYPIPE, one of Europe’s biggest manufacturers of plastic pipe systems, today said it expects its full year underlying operating profit to be just below previous expectations, after contractors were unable to access some sites due to flooding.

Flooding has caused misery for parts of Yorkshire over the last month.

The Doncaster-based company said it expects to report good growth in profits, despite challenging market conditions and the impact of the severe weather.

Polypipe is the largest manufacturer in the UK of plastic piping systems for the residential, commercial, civils and infrastructure sectors by revenue. It is also a major designer and manufacturer of energy efficient ventilation systems in the UK.

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The company has issued a trading update for the 10 months ended October 31 2019. The company said it had achieved a resilient performance in tough markets with group revenue 4.3 per cent higher at £381.7m.

The operating margins were also higher due to margin accretive acquisitions and strong cost controls, the company said.

Polypipe said there had been continued good contribution from its acquisitions, which are performing well and the M&A (merger and acquisitions) pipeline remains encouraging.

The statement added: “Trading in the last four months reflects strong 2018 comparatives and short term political and economic uncertainty impacting our markets, with group revenue 1.7 per cent higher than the prior year. Since the end of October, this has been compounded by flooding and poor ground conditions, most notably in the North and the Midlands, meaning contractors and developers have not been able to access sites for civils and groundworks activities

“Against this backdrop, the board now expects underlying operating profit for the year to be just below its previous expectations.”

The statement added; “The group remains highly cash-generative and the long-term fundamentals of our markets remain robust.”

Performance in the residential systems segment in the four months ended October 31 2019 was broadly consistent with the first half of the year with revenue 7.9 per cent higher than the prior year, with a “robust performance” against strong comparatives in difficult market conditions boosted by a healthy contribution from Manthorpe Building Products, which was acquired in October 2018.

The statement added: “This leaves revenue for the ten months ended October 31 2019 8.2 per cent higher than the prior period. Manthorpe continues to perform ahead of expectations and the integration programme remains on track to be completed by the end of the year as planned.

“Against strong comparatives, the commercial and infrastructure systems segment saw revenue decline by 5.8 per cent in the four months ended 31 October 2019.

“Trading became tougher in this period with performance impacted by increased project delays in the UK commercial construction sector as political and economic uncertainty impacted investment decisions, partly offset by a good performance in roads and contributions from the Permavoid business acquired in August 2018 as well as the recently acquired Alderburgh business, both of which are performing to expectations.”

Revenue for the ten months ended 31 October 2019 is 0.6 per cent lower than prior year on a reported basis after benefitting from a good first half performance,Polypipe said.

Martin Payne, the chief executive officer, commented: “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. 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”.

Earlier this year, Polypipe hosted a visited from the Princess Royal. The Princess was given a guided tour of one of the FTSE 250-listed multinational’s manufacturing sites in Doncaster.

The group operates from 18 facilities and has more than 20,000 product lines.

Polypipe primarily targets the UK and European building and construction markets. It also has a presence in Italy, the Netherlands and the Middle East and sales to specific niches in the rest of the world.