Record results for Polypipe
24 Aug 2017
Polypipe, one of Europe’s biggest manufacturers of plastic pipe systems, reported record half year results but said it remains alert to uncertainties caused by the recent General Election and the Brexit negotiations.
The Doncaster-based firm said it is yet to see any impact, but it remains watchful. Chief executive David Hall said: "We haven't seen any impact on our market apart from cost inflation on imported materials. "We remain watchful of consumer sentiment, but housebuilding will carry on regardless. We think the majority of our markets are robust. "Looking ahead, things are likely to get more challenged.
People don't like uncertainty, but in our market I'm not sure that's the case." Polypipe reported an 8 per cent rise in revenue to a record £242m in the six months to June 30. Pre-tax profits rose 5 per cent to £31.5m. "This is a good set of results," said Mr Hall. "We have a very balanced spread across the construction market. We have a need for more housing and there is a broad political consensus on that."
Analyst Gavin Jago at Peel Hunt said: "Despite pressure from raw materials, a soggy UK RMI market and some issues in the Middle East, Polypipe has again produced a robust set of figures. "Its broad end construction market exposure has meant the star turn in the first half was new residential while the outlook for infrastructure spending looks better for the second half. "While forecasts are not changing, we continue to see the group as a market leading, reliable performer which produces strong cash flow and is only modestly rated."
Polypipe manufactures plastic piping and ventilation systems for the residential, commercial, civils and infrastructure sectors. The group said that following a slow start to the year, the UK roads programme is expected to accelerate in the second half, underpinning demand in its UK commercial and infrastructure systems segment. The firm said that with different sectors of the UK construction market performing at different rates, it benefits from a strategic balance of activity with no over reliance on any one sector.
“Although underlying fundamentals remain positive, the group has experienced varying conditions in its different markets and has also faced some challenges in the first half of the year," said Mr Hall. “I am encouraged by the way the business has risen to these challenges which is further evidence of the depth and strength of management across the group."
The firm said it has taken decisive action at its Middle East manufacturing plant to temporarily cease manufacturing and reduce costs in response to the recent trade embargo between UAE and Qatar. "We are continuing to sell to the Middle East," said Mr Hall. "We set up a plant to Dubai. A lot of construction is in Qatar. There is enough work for us in Dubai. Longer term it's a good place for us to do business so it's a temporary halt at this time."
Polypipe is continuing work on replacing old fashioned pipes made out of copper, concrete, clay and steel. "I can't understand why anyone would put in anything but plastic," said Mr Hall. "Plastic is more flexible than copper and it lasts longer. If it (the weather) freezes, plastic doesn't burst, it has less leakage and it's lighter than clay."
Polypipe has announced that Mr Hall will retire on October 2 and will be succeeded by Martin Payne, who is currently chief financial officer. Mr Hall has been in charge of the group for the past 12 years, during a period when the firm has outperformed the market. He has more than 20 years of experience in the building products industry.
Glen Sabin, who is currently managing director of Polypipe Plumbing and Heating division, will be appointed to the board as chief operating officer on October 2. Polypipe said the handover process is progressing well, as is the process to find a new chief financial officer. It said that further announcements will be made in due course.