probably near the low of its trading range/the budget push for increased building will help .BREE is a well managed group but the outlook across a swathe of our economy is hardly riveting .i'm holding but not expecting fireworks
It makes you wonder why the SP is falling again today after the following, very positive, RNS. Buying opportunity maybe since it has fallen back from 93p only a short while ago?
22 November 2017
BREEDON GROUP PLC ("Breedon" or "the Group")
Breedon delivered another solid performance in the 10 months to 31 October 2017. Both volumes and revenues were ahead of the prior year, including a full 10-month contribution from the former Hope Construction Materials business, which was part of the Group for only three months in the corresponding period of 2016.
Group sales volumes of aggregates increased by 47 per cent, asphalt by 2 per cent and concrete by 99 per cent. Our cement business is performing in line with our expectations1. Total Group revenue for the period increased by 56 per cent to approximately £561 million.
Assuming normal weather conditions for the remainder of the financial year, the Group's underlying EBIT for the full year is expected to be in line with current market expectations2.
Forecasters expect construction output to grow modestly in 2017 and remain broadly flat next year before returning to growth in 2019. More significantly for us, new infrastructure and housing work - which together account for approximately two-thirds of our end-use markets - are expected to show healthy growth over the next two years.
We continue to invest in our business at record levels, which is yielding appreciable benefits in terms of enhanced performance and improved productivity. This organic improvement gives us confidence that we will make further progress in 2018.
We will announce our preliminary results for the year ending 31 December 2017 on 7 March 2018.
- ends -
1 In accordance with the Cement Market Data Order 2016, cement volumes are not disclosed.
2 The Group believes that current market expectations for underlying EBIT range from £74 million to £83 million.
For further information:
Breedon Group plc
Pat Ward, Group Chief Executive
Rob Wood, Group Finance Director
Stephen Jacobs, Head of Communications
Cenkos Securities plc
Max Hartley (Nomad)
020 7397 8925
Numis Securities (joint broker)
Heraclis Economides/Ben Stoop
020 7260 1000
Note to editors
Breedon Group plc is the UK's largest independent construction materials group. It operates the country's largest cement plant, two cementitious import terminals, around 60 quarries, 30 asphalt plants, 200 ready-mixed concrete plants and three concrete products plants nationwide. The Group employs around 2,300 people and has more than 750 million tonnes of mineral reserves and resources. Its strategy is to continue growing organically and through acquisition of businesses in the UK heavyside construction materials market.
If you read my comment carefully you will see that I postulated a dividend of some 50% of available profits, i.e. 2X covered, as a reasonable possibility and suggested that this level of dividend was insufficient to support a share price of 80p.
It is immaterial to me as I have converted £5,000 into £35,000 so am happy someone is willing to buy at this price. I was not.
Using Chers definition, Berkshire Hathaway is a Ponzi scheme.
A company should only be paying a dividend if it doesnt have sufficiently attractive reinvestment opportunities, whether those are internal or external. So far Breedon has demonstrated itself to be an adept capital allocator and one that I trust to either reinvest internally or acquire other businesses.
It could also be argued that a company that retains more capital, and is able to earn strong returns on capital, should be expected to have a higher earnings multiple, since the net present value of retained earnings is higher than the value of a dividend.
You have you opinion and you may or may not be correct. (What was the difference with, for example Facebook in the US where no profits were made for years...and also more recently Snapchat - neither of which I hold directly but almost certainly via US ETFs)
Just because a company re-invests it's cash-flow into further growth opportunities doesn't make it a Ponzi. As far as I can tell virtually all companies re-invest for growth and then as that reduces then the profits are increasingly paid in divid as the company matures.
The question was, basically where is the divi that you stated gave you the yield?
As far as I can see there isn't one. Am I correct on that or are you?
Without a dividend or a planned liquidation a company like Breedon is akin to a giant Ponzi scam. It is only supportable if new mugs appear to buy the shares as a reward is only obtained by selling. My point was that the profits do not support the present share price.
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