Polypipe benefits as market recovers

From left, Paul Rice, Polypipe business development director, Peter Shepherd, chief financial officer, and David Hall, chief executive.
From left, Paul Rice, Polypipe business development director, Peter Shepherd, chief financial officer, and David Hall, chief executive.
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​​POLYPIPE, one of Europe’s biggest manufacturers of plastic pipe systems, reported strong growth at its UK operations thanks to growing construction demand, but said its French operation was hit by a weak housing market.

The Doncaster-based firm, which floated last April, reported positive trading in its main UK market during the first four months of 2015 with UK revenue growth of 6.3 per cent, ahead of the same period last year.

The group said it was up against tough comparisons in 2014 when new build residential and commercial and infrastructure construction started the year very strongly.

Within the residential sector, Polypipe said it was encouraging to see an improvement in repair, maintenance and improvement (RMI) activity, which still remains well below previous levels.

The group is benefiting from strategic growth initiatives in the areas of water management and carbon efficient solutions while export sales to the Gulf region also performed well.

Polypipe is seeing strong demand from UK housebuilders, particularly from smaller developers and projects outside of London and the South-East.

In mainland Europe, which mainly consists of France, revenue from commercial and infrastructure business fell by 18.3 per cent and by 8.9 per cent at constant exchange rates.

Housing starts in France, a good indication of activity, fell 8.3 per cent in the three month period to March 2015.

Despite the fall, Polypipe said the weak market conditions in France have had a very limited impact on the overall group operating result and the operations remained marginally profitable during the period.

It added that the adverse currency translation effect on earnings also had very little impact on the overall group operating result.

Polypipe’s chief executive David Hall said: “Our growth initiatives combined with the continued positive market backdrop in our main UK market means we remain confident that the group will deliver results for the year in line with board expectations”.

Analysts at Liberum said in a note: “It is surprising that management has made no mention of rising polymer prices which are causing some disruption in industry, but perhaps that is why they are keeping guidance for the year unchanged in spite of quite a good start.”

Polypipe will report its interim results for the six months to June 30 on August 20.

In 2014, revenue rose nine per cent to £327m, although pre-tax profits fell from £25m to £17m following over £20m in flotation costs.

Taking these costs out, pre-tax profits rose 53 per cent to £38m.