Polypipe delivers record half year performance

MANUFACTURING firm Polypipe today revealed that it had delivered a record first half performance and orders had not shown any signs of weakening after the vote in support of Brexit.

David Hall, CEO of Polypipe
David Hall, CEO of Polypipe

Doncaster-based Polypipe, which is one of Europe’s biggest manufacturers of plastic pipe systems, stressed that the market fundamentals were still strong.

In the six months ended June 30, Polypipe’s revenue rose by 31 per cent to £223.3m, while its profit before tax increased by 29 per cent to £29.9m.

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The company said that, after an excellent start, demand from all segments of the core UK market has remained strong.

It has seen continued progress in growth initiatives linked to carbon efficiency and water management.

The company said: “Order intake has remained consistent with the normal seasonal pattern and is yet to show any signs of weakening following the EU referendum.

Despite uncertainty, the fundamentals of the market remain robust.”

The statement added: “The business is extremely well balanced across its various sectors and does not have an over reliance on any particular part of the industry.”

Polypipe said there had been encouraging comments from the UK Government recognising the need to provide stimulus for construction.

The company said it was “alert to the economic situation” and able to adapt capital expenditure and capacity quickly.

The company secured a significant boost to its technical capability in the ventilation market through the £144.3m acquisition of Nuaire in August 2015.

The deal to buy Nuaire has helped Polypipe tap into new legislation to reduce carbon emissions. In a bid to reduce carbon emissions, the Government has introduced strict new rules on building regulations which are designed to reduce energy wastage. Ventilation can play a large part in harnessing the energy from warm air rather than pumping it back into the atmosphere.

Polypipe said that its Nuaire acquisition was performing well. The company also revealed that the first delivery from its manufacturing plant in Dubai was made during July.

David Hall, the company’s chief executive said: “We have delivered another record performance in the first half continuing the strong momentum from last year. Our strategic focus on the structural growth opportunities, together with the acquisition of our Nuaire ventilation business has accelerated our growth.

“Despite the uncertain economic backdrop, the long-term structural drivers of our business remain strong, our balanced business model means that we are not overly exposed to any particular sector and the nature of the group’s production processes enables us to adapt and flex quickly to changes in demand.

“The board is confident that the cash generative characteristics of the business and a commitment to remain agile will enable the group to continue to develop and outperform, whatever the market conditions.”

Analysts from Numis described the results as “impressive” and added: “Management state that demand from all the group’s core UK segments have remained strong and they are yet to see any signs of weakness following the EU referendum. “However, the group does point to post referendum uncertainty and therefore, despite strong interims, we leave our 2016 forecasts unchanged.”

The firm joined the London Stock Exchange’s FTSE 250 Index earlier this year, just under two years after its flotation.