Polypipe's revenue and profits rise after it secures key acquisition
Polypipe, one of Europe's biggest manufacturers of plastic pipe systems, delivered record results last year after its performance was boosted by a major acquisition.
In the year ended December 31, 2015, Polypipe’s revenue rose by eight per cent to £352.9m and the underlying operating profit rose by 17.1 per cent to £54.2m.
The company said it had 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 will help Polypipe tap into new legislation to reduce carbon emissions. Analysts said the acquisition of the Welsh firm would be a good strategic fit. 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.
Nuaire is performing in line with expectations, Polypipe said.
Polypipe also revealed that structural growth opportunities are driving the business ahead of the overall construction market.
The company has also reported continuing strong demand from residential new build construction, infrastructure and commercial developments, and its improved export performance was underpinned by a growing presence in the Middle East.
Capital expenditure increased by 28 per cent to £19.3m to fund growth opportunities.
David Hall, the chief executive said: “2015 was a record performance and another year of excellent progress for the group.
“The acquisition of Nuaire was an important step in our strategic development and our growth initiatives continued to deliver.
“I am delighted to report such a strong performance since our IPO in April 2014, with underlying operating profit growth of 36.5 per cent over the last two years.
“While there are economic and political uncertainties, 2016 has started well and the board is confident that the market fundamentals in our main UK market remain positive and that we are pursuing a sound strategy for the future development of the business”.
The Doncaster-based firm joined the London Stock Exchange’s FTSE 250 Index earlier this year, just under two years after its flotation.
Mr Hall said: “We’re very pleased - it’s an acknowledgement of the progress we have made since the IPO.”
Mr Hall said Polypipe didn’t have a stance on the ongoing debate about whether Britain should remain in the European Union.
The group primarily targets the UK, French and Irish building and construction markets and it also has a global presence.
In a statement to accompany the results, Polypipe said: “We are increasing our commitment to customer training. In Doncaster we are strengthening our customer training capability by enhancing our Northern area customer training facility.
“We formally opened our new customer training centre in Dubai during October 2015 which enables us to train our customers and demonstrate our full capability across a comprehensive range of systems.
“Despite cautious sentiment in the Middle East region, the majority of construction activity we are involved with tends to be high profile, state sponsored projects which have continued to attract funding.
“Following recent years, where flood risk has attracted more attention in this area, our efforts to help develop a specification for storm water attenuation with the relevant authorities has led to some promising initial orders which have been delivered from the UK. We are making good progress with our plans to manufacture water management attenuation cells in the Jebel Ali Free Zone in Dubai.”
In a note, Deutsche Bank said: “With Polypipe results continuing to show volume growth ahead of market and the ability to reach consensus EBIT estimates despite a more difficult trading environment..we believe the key focus of today’s results may be the more upbeat start to the year... we believe the stock is too cheap given its double digit earnings growth and strong cash generation profile.”
Polypipe is among the 10 largest manufacturers of plastic piping systems in Europe. It operates from 19 facilities in total, and has 20,000 product lines,