Breedon Group Plc · LSE:BREE
Breedon — H1 2023 Earnings Presentation
33 slides from Breedon's earnings presentation, Jul 26, 2023
Slide 1: Breedon Group plc Interim Results 2023
Breedon Group plc Interim Results 2023 26 July 2023
Slide 2: Forward looking statement
Forward looking statement The information contained in this presentation document (the “presentation”, which term includes any information provided verbally in connection with this presentation document) does not constitute an offer or solicitation to hold, sell or invest in any security and should
Slide 3: Agenda
Agenda Group Financial Operational Q&A highlights review review & outlook Rob Wood, James Brotherton, Rob Wood, Chief Executive Officer Chief Financial Officer Chief Executive Officer 3 Breedon Interim Results 2023 • July 2023
Slide 4: Highlights
Strong first half Full year expectations maintained Resilient end-markets Structurally growing end-markets, long-term customer relationships, vertically-integrated model and deep local market knowledge Highlights Robust operational performance Dynamic pricing tailwind more than offset expected lower
Slide 5: Highlights: Strategic priorities gaining momentum
Strategic priorities gaining momentum Significant milestones achieved Sustain Progressed SBTi commitment, on track for a CDP rating, key partner in the Peak Cluster initiative, further increased Cement alternative fuel use Highlights Optimise Initiated operational excellence reviews, driving busines
Slide 6: Financial review
Financial review James Brotherton, Chief Financial Officer 6 Breedon Interim Results 2023 • July 2023
Slide 7: 2023 interim financial highlights
2023 interim financial highlights Increased earnings underpinned by a strong balance sheet Revenue Underlying EBIT ROIC £742.7m +11% £70.5m 9.5% 10.0% Flat Revenue Margin HY 22: £671.1m growth HY 22: £66.9m HY 22: 10.0% HY 22: 10.0% Free Cash Flow Net Debt Interim Dividend per share £20.8m £31.9m £2
Slide 8: Revenue and EBIT bridges
Revenue and EBIT bridges Pricing tailwinds offset lower volumes REVENUE BRIDGE EBIT BRIDGE £ million +11% £ million +5% 80.1 25.0 742.7 80.1 (33.5) 671.1 (9.1) 1.2 70.5 66.9 (68.6) HY 22 Sales Volume M&A HY 23 HY 22 Sales Costs Volume M&A HY 23 Price & Mix Price & Mix EBIT +12% -5% +4% EBIT 10.0% Ma
Slide 9: Cost inflation moderating
Cost inflation moderating Managed through layered hedging approach and dynamic pricing UK Electricity Bitumen EU Carbon 1800 250 1400 1600 1200 200 1400 1000 1200 150 1000 800 800 600 100 600 400 400 50 200 200 0 0 0 2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 202
Slide 10: Divisional contribution
Divisional contribution All divisions growing revenue and earnings Great Britain Ireland Cement Group £519.6m £109.1m £176.8m £742.7m Revenue HY 23 519.6 HY 23 109.1 HY 23 176.8 HY 23 742.7 HY 22 473.1 HY 22 98.4 HY 22 150.1 HY 22 671.1 HY 21 420.2 HY 21 101.1 HY 21 120.0 HY 21 600.9 HY 20 209.0 HY
Slide 11: 2023 Net Debt and Cash Flow
2023 Net Debt and Cash Flow Reduced seasonal working capital outflows year on year £ million Inflow Outflow IFRS 16 Free Cash Flow +£20.8 million £0 112.3 (40.9) (3.5) (15.9) 0.7 (31.9) (170.9) (11.1) (197.7) (23.7) (5.4) (3.3) (220.4) (49.5) Opening Underlying Working Interest Tax Net capital Other
Slide 12: 2023 technical guidance
2023 technical guidance Trading in-line with Board expectations Income statement Cashflow • Net interest expense c.£12m • Cash interest c.£8m • Effective tax rate c.20% (2022: 16%) rising to c.22% • Cash tax payments higher than effective rate in 2024 • Capital expenditure c.£100m • Increased tax ra
Slide 13: Balanced financial framework delivering
Balanced financial framework delivering Benefitting from strategic execution and operational focus Maintaining Proactive Meeting strategic Increasing return on capital investment objectives dividends Replenished reserves and Profitable EBIT ORGANIC 2023 interim resources growth +5% dividend Increase
Slide 14: Operational review
Operational review Rob Wood, Chief Executive Officer 14 Breedon Interim Results 2023 • July 2023
Slide 15: UK market; construction resilience
UK market; construction resilience Infrastructure and industrial holding steady UK GDP; avoiding recession GB Construction output index New Housing Infrastructure Industrial • UK GDP estimated flat in the five months to May Commercial All Work Construction output; headline masks growth areas 140 • E
Slide 16: RoI market; regaining momentum
RoI market; regaining momentum Construction confidence recovering RoI Construction output index Total Construction Building (excl. civil engineering) RoI’s Modified Domestic Demand stable Civil Engineering Non-res building Residential building • Q1 reflected mixed results, masking a positive 130 con
Slide 17: Great Britain
Great Britain Successful first half Solid performance in a softening market Volumes declined in line with the broader market Aggregates Asphalt Concrete • Concrete volumes reflect an acceleration of activity in advance of Million tonnes Million tonnes Million m³ new building regulations 13.2 (3)% +1
Slide 18: Ireland
Ireland Performed well in the first half Clear regional themes emerging • NI remains impacted by the absence of the governing Assembly Aggregates Asphalt Concrete • Healthy market in RoI; positive tendering season, awarding Million tonnes Million tonnes Million m³ work on quality measures +14% 1.8 0
Slide 19: Cement
Cement Strong start to 2023 Resilient end-markets delivered growth • Volumes declined in line with the broader market • Pricing supported by robust fundamentals and a tailwind from Cement the prior year Million tonnes Significant milestones achieved towards net zero objective (3)% 1.2 1.2 • Key part
Slide 20: Outlook and summary
Outlook and summary Rob Wood, Chief Executive Officer 20 Breedon Interim Results 2023 • July 2023
Slide 21: Well-positioned for the second half
Well-positioned for the second half Following robust first half performance Macro forecasts revised Breedon model is resilient Construction output forecasts for 2023 Deep market knowledge, solid operating revised down to -7.0% UK, +2.1% RoI performance, strong cash generation Outlook and Summary Nea
Slide 22: Q&A
Q&A Breedon Interim Results 2023
Slide 23: Appendix
Appendix Breedon Interim Results 2023 23 Breedon Interim Results 2023 • July 2023
Slide 24: H1 2023 Income Statement
H1 2023 Income Statement £ million HY 23 HY 22 Revenue 742.7 671.1 Underlying EBITDA 112.3 107.0 Depletion & depreciation (43.4) (41.8) Share of associate and joint ventures 1.6 1.7 Underlying EBIT 70.5 66.9 Net interest (5.6) (6.0) Non-underlying items (8.4) (1.4) Profit before tax 56.5 59.5 Tax at
Slide 25: H1 2023 Balance Sheet
H1 2023 Balance Sheet £ million HY 23 HY 22 Property, plant and equipment 790.5 749.9 Right-of-use assets 47.3 46.8 Intangible assets 519.4 503.2 Investment in associate and joint ventures 15.3 13.4 Inventories 87.1 74.1 Trade and other receivables 324.4 296.6 Current tax receivable - 0.5 Total asse
Slide 26: H1 2023 Free Cash Flow
H1 2023 Free Cash Flow £ million HY 23 HY 22 Underlying EBITDA 112.3 107.0 Working capital and provisions (40.9) (77.2) Net interest paid (3.5) (4.5) Income taxes paid (15.9) (15.3) Net capex (31.9) (32.5) Other 0.7 0.5 Free cash flow 20.8 (22.0) Acquisition of businesses (11.1) - Dividends paid (23
Slide 27: Impact of 5:1 share consolidation
Impact of 5:1 share consolidation Restated 2018 2019 2020 2021 2022 Adjusted Underlying Basic EPS 23.5p 25.4p 15.9p 29.9p 35.4p Underlying Basic EPS 23.5p 25.4p 14.1p 24.8p 35.1p Statutory Basic EPS 20.0p 23.2p 10.0p 23.2p 33.2p Underlying Diluted EPS 23.4p 25.3p 14.1p 24.7p 34.9p Statutory Diluted
Slide 28: Disciplined cost management
Disciplined cost management Flexible cost base supported by forward hedging programme 35% - materials & other direct costs 20% - other • Includes imported cement, bitumen, • Depreciation subcontractor and direct mineral costs • Repairs & maintenance • Bitumen hedged where commercially appropriate –
Slide 29: Financing Breedon's Future
Financing Breedon’s Future Diversified long-term sources of finance Debt finance positioned to Debt Maturity profile support future growth £m Long term debt funding £m £350 million unsecured RCF 600 600 £250 million US Private Placement RCF 1.75% +SONIA at <1x Leverage 500 500 USPP average rate c.2%
Slide 30: MPA volumes
MPA volumes MPA Aggregates volumes (million tonnes) (40)% 170 150 130 110 14% 90 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 MPA Asphalt volumes (million tonnes) 31 (36)% 26 21 14% 16 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Slide 31: Market consensus
Market consensus Company compiled as at July 2023 2023 2024 Average Range Average Range Revenue £1,454m £1,433m - £1,493m £1,497m £1,420m - £1,546m Underlying EBIT £146m £134m - £159m £155m £140m - £168m £ Underlying basic 30.5p 28.1p - 33.3p 32.0p 28.3p - 35.3p earnings per share Net debt £163m £12
Slide 32: Track record of sustainable growth
Track record of sustainable growth Six bolt-on CEMEX Breedon transactions Hope Lagan UK assets 2011* 2012* 2013* 2014 2015 2016 2017 2018 2019 2020 2021 2022 UK 87% Rol 13% £169m Revenue CAGR 21% £1,396m £6m Underlying EBIT CAGR 34% £155m Covenant 5.6 Leverage times Infrastructure c.50% 3.6 1.9 Hous
Slide 33: We are making a material difference
We are making a material difference Our Purpose Our Vision To make a material difference to the lives of To be a leading vertically-integrated our colleagues customers and communities international construction materials group Our Values To adopt clear authentic behaviours to ensure long-term succes