Low oil prices and an Aberdeen city bypass supply deal spurred building materials firm Breedon Aggregates on to a strong first half of 2015.
Announcing a near doubling of profits over the six months, the Derby-based firm said yesterday the performance of its Scottish business had been exceptional.
And emboldened by the results, Breedon adjusted its underlying earnings before interest, tax, depreciation and amortization (Ebitda) margin targets to pre-recession levels and revealed that it is reviewing “several acquisition opportunities”.
The company also pointed to the Mineral Products Association’s prediction of a return to pre-crash levels of national aggregates consumption as a reason for its optimism
But Breedon warned that the outlook for demand in Scotland was weaker than in England, even though it is about to start work on several large contracts north of the border.
Staff welfare was another concern for the firm, which is the UK’s largest independent aggregates firm, as the number of injuries that led to employees missing work doubled to four.
Breedon’s Dundee-headquartered Scottish business employs about 700 people and operates 38 quarries, 17 asphalt plants, 36 ready-mixed concrete plants and two concrete block plants.
It started off-site concrete supplies to the £745million Aberdeen city bypass project during the six months and will soon commence work on the A9 dualling between Perth and Inverness, the surfacing of the new Forth Crossing, and a large number of wind farms in Ayrshire and the north west of Scotland.
It has also ordered new asphalts plant to replace a 40-year-old facility in Inverness, and the one at Tom’s Forest near Kintore, Aberdeenshire, which it was forced to sell.
The UK’s anti-monopoly watchdog, the Competition and Markets Authority, had ordered the sale to make room in the market for a competitor in the wake of Breedon’s £34million acquisition of Aggregate Industries UK’s Scottish assets.
However, despite these developments, Breedon said future underlying demand in Scotland is unlikely to be as strong as in England, where a number of target contracts have been identified for the second half of the year.
The firm lamented that there has been “no sign of increased maintenance spending by Transport Scotland following the significant declines of 2009 and 2011”. Previously, the firm said there seemed to be “less visibility” on public spending plans north of the border.
Breedon owns a 37.5% stake in Bear Scotland, which manages the north-east and north-west trunk road networks on behalf of Transport Scotland.
The group’s pre-tax profits soared to £17.5million from £9.1million previously on the back of revenues of £160.5million, up 28% year-on-year.
Breedon said trading was bolstered by the acquisitions of Cumnock-based Barr Quarries, bought in October 2014 for £21million, and Huntsmans Quarries, headquartered in the Cotswolds, in June of last year.
The firm’s executive chairman, Peter Tom, said: “Trading during the first half was strong, with both the underlying business and recent acquisitions performing ahead of our expectations.
“March was a record month for the group, with exceptional performances from both England and Scotland.”
On the company’s future prospects, Mr Tom said: “Assuming that current trading conditions continue through the second half of 2015, we believe that market expectations for the year will be exceeded.”