Breedon sales recover after lockdown slump

Grant Prior 2 weeks ago
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Breedon said the recovery in demand for materials is “well underway” after sales last month bounced back to 99% of those in June 2019.

Latest results for the company show lockdown led to a pre-tax loss of £10.1m during the first half of the year compared to a £39.5m profit last time as revenue slumped 25% to £335.3m.

Breedon shut down most of its operations and furloughed 80% of staff as lockdown hit.

Sites started reopening in early May and by the end of June over 90% of plants were open with 82% of staff back at work.

Pat Ward, Group Chief Executive, said: “Following the encouraging performance of our businesses in the first 12 weeks of the year, the move into lockdown and immediate fall in demand in the latter part of March led us into a swift and managed shutdown of the majority of our operations, leaving open only those which were servicing critical needs. 

“This decisive action ensured the protection of our employees, left our sites in a safe condition and also positioned us to return quickly to production when demand began to return in early May. 

“The recovery in our markets now appears to be well underway, and we have seen continued improvement into July.

“The great majority of our sites are now open, including both our cement plants. 

“While near-term uncertainty remains, there is significant pent-up demand to be satisfied in both housing and infrastructure, reinforced by the substantial programme of investment confirmed by the Chancellor earlier this month. 

“Looking to the longer-term, we believe the outlook for our markets remains positive, supporting our confidence in the prospects for the Group.”

Product firms to focus on online sales

Construction product manufacturers are shifting investment towards e-commerce sales as lockdown caused their worst quarterly performance since the 2008/09 recession.

The Construction Products Association’s State of Trade Survey for 2020 Q2 reports that 81% of heavy side manufacturers reported a fall in sales compared to Q1. Sales of light side products were reported to have decreased by 68% of manufacturers. Both were the lowest balances since 2008 Q4.

Manufacturers expect the recovery to cautiously begin in Q3, with 13% of heavy side firms and 9% of light side firms anticipating a rise in sales in the next quarter, on balance.

The change in trading conditions also prompted change in business models with 53% of heavy side producers and 50% of those on the light side anticipating increased investment in e-commerce.

Rebecca Larkin, CPA Senior Economist said: “Within the quarter it’s likely to have been a tale of two halves, with manufacturing lines closing in response to pauses in site activity in April and early May, followed by a phased restart as construction gradually resumed from mid-May.

“Uncertainty over the economy, the appetite for new project starts and potential longer-term structural changes in demand mean that industry’s questions now move away from the question of how low can it go, to how quickly it can come back.”

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