Polypipe delivers revenue growth after performance is boosted by acquisitions

Polypipe Group 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.

In the six months ended June 30 2019, the company's revenue rose by 6.2 per cent to £223.3m while underlying operating profit was 8.3 per cent higher at £39.3m.

Martin Payne, the chief executive, commented: “The business has performed well in the first half with good revenue growth and improved margins through selective cost reductions and acquisitions.

"The medium-term fundamentals of our markets remain strong. Whilst we are mindful of current political and economic uncertainty, management continues to focus on self-help measures and together with an encouraging start to the second half, the board’s profit expectations for the year remain unchanged.”

The interim dividend increased by 8.1 per cent to 4.0 pence per share. Residential systems achieved revenue growth of 8.4 per cent and commercial and infrastructure systems revenue was 3.4 per cent higher despite challenging markets, Polypipe said.

In a statement to accompany the results, Polypipe said: "Further progress has been made in the period despite challenging market conditions, with the strategic initiatives of legacy material substitution and exploiting legislative tailwinds in water and climate management together with providing a "one-stop-shop" for customers in the UK driving growth.

"During the period we have continued to focus on integrating our newly acquired businesses of Manthorpe Building Products and Permavoid. The Permavoid integration is now complete and the Manthorpe integration progresses well and is currently on track to be completed by the end of the year. Both businesses are performing in line with expectations.

"The group continues to evaluate further opportunities with its twin track approach to M&A (merger and acquisition), focusing firstly on providing the “one-stop-shop”, by filling product gaps and adjacencies in water and climate management, and secondly looking to leverage its skills, technology and IP (intellectual property) across wider geographic markets."

The statement added: "Performance in May and June was impacted by merchant destocking in the lead up to half year, although the second half of the year has started encouragingly, with merchants rebuilding stock levels ahead of the next EU Withdrawal date of October 31."

Polypipe said that both new house building and repair, maintenance, and improvement market activity has been reasonably robust, despite political and economic uncertainty.

The statement added: "Residential systems delivered an underlying operating profit 11.8 per cent higher than the prior year at £26.6m representing a 20.6 per cent margin with cost reduction activities in the period, notably the resolution in the second quarter of logistics inefficiencies encountered towards the end of 2018 at our Broomhouse Lane plant, and the accretive effect of acquisitions on margins more than offsetting the dilutive effect of price increases."

The group operates from 18 facilities, and has more than 20,000 product lines. It manufactures the UK’s widest range of plastic piping systems for heating, plumbing, drainage and ventilation. Polypipe primarily targets the UK and European building and construction markets with a presence in Italy, the Netherlands and the Middle East and sales to specific niches in the rest of the world.

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.