Breedon Group Plc · LSE:BREE
Breedon — H1 2022 Earnings Presentation
32 slides from Breedon's earnings presentation, Jul 27, 2022
Slide 1: Breedon Group plc Interim Results 2022
BREEDON GROUP PLC INTERIM RESULTS 2022 27 JULY 2022
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 2022 • July 2022
Slide 4: Highlights
Strong delivery to long-term growth markets Dynamic pricing underpinned by resilient demand Resilient demand Sustain Supportive market exposure; Progressing initiatives; committed to infrastructure, house building, industrial the Science Based Targets initiative Highlights Rational pricing environme
Slide 5: Financial Review
FINANCIAL REVIEW JAMES BROTHERTON, CHIEF FINANCIAL OFFICER 5 Breedon Interim Results 2022 • July 2022
Slide 6: 2022 Interim Financial Highlights
2022 Interim Financial Highlights Strong performance across key metrics Revenue Underlying EBIT ROIC £671.1m +12% £66.9m 10.0% 10.0% +80bps Revenue Margin HY 21: £600.9m growth HY 21: £56.4m HY 21: 9.4% HY 21: 9.2% Free Cash Flow Net Debt Interim Dividend excluding IFRS 16 per share (£22.0)m £32.5m
Slide 7: Price driven growth and margin
Price driven growth and margin Revenue and EBIT bridges REVENUE BRIDGE EBIT BRIDGE £ million £ million +12% +19% (10.1) +£70.2 0.3 +£10.5 (2.7) 30.1 0.1 5.4 52.9 4.7 671.1 66.9 600.9 56.4 HY 21 Great Ireland Cement Eliminations HY 22 HY 21 Great Ireland Cement Head Office HY 22 Britain Britain / JVs
Slide 8: Input cost pressures
Input cost pressures Focus on cost recovery and adding value UK Electricity Bitumen Carbon 900 250 1400 800 1200 700 200 1000 600 150 500 800 400 600 100 300 400 200 50 200 100 0 0 0 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 Source: Bloomberg. Note: Charts based on 3
Slide 9: Underlying EBIT Margin Recovery
Margin Recovery Strong margin recovery underpinned by dynamic pricing Great Britain Ireland Cement Group £473.1m +13% £98.4m -3% £150.1m +25% £671.1m +12% Revenue 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 20 69.2 HY 20 81.5 HY 20 33
Slide 10: 2022 Net Debt and Cash Flow
2022 Net Debt and Cash Flow H1 Cash Flow in line with expectations £ million Inflow Outflow IFRS 16 Impact 0 Free Cash Flow (£22.0) million (77.2) (4.5) (15.3) (212.5) 107.0 (208.2) (32.5) 0.5 (18.6) (3.6) (256.7) 48.5 Opening Underlying Working Interest Tax Net capital Other Dividends Other Closing
Slide 11: Technical guidance 2022 updated
Technical guidance 2022 updated Income statement Cashflow • Will realise £2m Cemex synergies in 2022 benefiting • Working capital outflow c.£30m - £40m H1 and H2 equally • Capital expenditure £100m, equating to £170m • Net interest expense c.£13m over two years to 2022 • Effective tax rate c.16.4% •
Slide 12: Balanced financial framework delivering
Balanced financial framework delivering Driving increased return on invested capital Increasing return on Proactive Meeting strategic Excess capital capital through investment objectives distributed strategic deployment Replenished and extend ORGANIC Profitable EBIT reserves and resources growth +19
Slide 13: Operational Review
OPERATIONAL REVIEW ROB WOOD, CHIEF EXECUTIVE OFFICER 13 Breedon Interim Results 2022 • July 2022
Slide 14: UK market; resilient demand
UK market; resilient demand Exposed to growing end markets GB Construction output index New Housing Infrastructure Industrial UK GDP ahead of expectations Commercial All New Work • UK GDP +0.5% in May 2022 140 • Up 3.5% last twelve months, reflecting cross-sector growth 120 UK construction resilient
Slide 15: ROI market; positive demand
ROI market; positive demand Breedon markets at or above pre-pandemic levels RoI Construction output index Total Construction Building (excl. civils) RoI’s Modified Domestic Demand remains strong Civils Non-res building Residential • Growth remains strong; MDD +5.8% in 2021 160 • MDD declined 1.0% fi
Slide 16: Great Britain
Great Britain Active end markets support rational pricing Resilient end markets • Under-pinned by long-term growth dynamics, central Government commitments and rising environmental agenda Aggregates Asphalt Concrete Million tonnes Million tonnes Million m³ Rational pricing environment, offsetting co
Slide 17: Ireland
Ireland Tendering activity gaining momentum Tendering gained momentum through Q2 • Volumes reflect the well documented delays in the NI Department for Infrastructure (DFI) procurement; revised Aggregates Asphalt Concrete tendering processes Million tonnes Million tonnes Million m³ • DFI Down Distric
Slide 18: Cement
Cement Reflecting healthy customer order books Enquiry levels sustained • Well telegraphed inflation backdrop enabling regular price increases, achieving full cost recovery Cement Million tonnes Maintenance schedule normalised -3% • Two kiln shutdowns completed in January, on time and 1.2 1.2 budget
Slide 19: Sustain: Delivering our strategy
Sustain: Delivering our strategy Putting plans into action PLANET PEOPLE PLACES Pillar Driving colleague engagement: Driving the sales of Peak Cluster: Linked to Highest participation and products with enhanced HyNet CCS project engagement ever sustainability features Colleagues volunteering Imminen
Slide 20: 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
Slide 21: Outlook and Summary
OUTLOOK and SUMMARY ROB WOOD, CHIEF EXECUTIVE OFFICER 21 Breedon Interim Results 2022 • July 2022
Slide 22: Summary
Strong first half ahead of expectations Margins advanced, ROIC increased Growth forecasts moderating Optimistic for 2022 Construction output forecast to rise Expect Underlying EBIT towards in 2022; UK 2.5%, RoI 4.9% top of consensus range Outlook and Summary Uncertainty increasing Progressing strate
Slide 23: Q&A
Q&A BREEDON INTERIM RESULTS 2022 23 Breedon Interim Results 2022 • July 2022
Slide 24: Appendix
APPENDIX BREEDON INTERIM RESULTS 2022 24 Breedon Interim Results 2022 • July 2022
Slide 25: Our track record: Financial KPIs
Our track record Financial KPIs Revenue Underlying EBIT Margin Adjusted Underlying Basic EPS £m % pence £ 2021 1,232.5 2021 10.8 2021 5.98 2020 928.7 2020 8.2 2020 3.15 2019 929.6 2019 12.5 2019 5.08 2018 862.7 2018 12.0 2018 4.70 2017 652.4 2017 12.3 2017 4.14 Covenant Leverage Return on Invested C
Slide 26: Our track record: Non-financial KPIs
Our track record Non-financial KPIs Employee LTIFR Employee TIFR per million hours worked per million hours worked 2021 2.19 2021 15.57 2020 1.95 2020 15.42 2019 1.05 2019 17.17 2018 1.81 2018 20.54 2017 1.41 2017 14.28 Reserves and resources Emission intensity billion tonnes kgCO2 per £/revenue 202
Slide 27: H1 2022 Income Statement
H1 2022 Income Statement £ million HY 22 HY 21 Revenue 671.1 600.9 Underlying EBITDA 107.0 95.8 Depletion & depreciation (41.8) (40.1) Share of associate and joint ventures 1.7 0.7 Underlying EBIT 66.9 56.4 Interest (6.0) (7.5) Non-underlying items (1.4) (2.7) Profit before tax 59.5 46.2 Tax at effe
Slide 28: H1 2022 Balance Sheet
H1 2022 Balance Sheet £ million HY 22 HY 21* Property, plant and equipment 796.7 780.6 Intangible assets 503.2 506.4 Investment in associate and joint ventures 13.4 11.4 Inventories 74.1 57.1 Trade and other receivables 296.6 263.4 Current tax receivable 0.5 2.4 Total assets (excluding cash) 1,684.5
Slide 29: H1 2022 Free Cash Flow
H1 2022 Free Cash Flow £ million HY 22 HY 21 Underlying EBITDA 107.0 95.8 Working capital and provisions (77.2) (42.8) Interest paid (4.5) (4.9) Income taxes paid (15.3) (4.6) Net capex (32.5) (11.1) Other 0.5 1.9 Free cash flow (22.0) 34.3 Acquisition of businesses - (4.7) Dividends paid (18.6) - O
Slide 30: Financing Breedon's Future
Financing Breedon’s Future Diversified sources of finance at low interest rates Debt finance positioned to support future growth 700 RCF USPP31 Accordion USPP33 600 USPP28 USPP36 500 Cash Available 400 liquidity £389m 300 2021 Refinancing £350 million unsecured RCF 200 £250 million US Private Placem
Slide 31: MPA volumes
MPA volumes MPA Aggregates volumes (million tonnes) (40)% 170 150 130 110 21% 90 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 MPA Asphalt volumes (million tonnes) 31 (36)% 26 21 22% 16 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Slide 32: Market consensus
Market consensus Company compiled as at July 2022 2022 2023 Average Range Average Range Revenue £1,334m £1,265m - £1,384m £1,378m £1,304m - £1,433m Underlying EBIT £143m £140m - £149m £149m £144m - £155m £ Underlying basic 6.4p 6.1p – 6.8p 6.3p 6.0p – 6.8p earnings per share Net debt £168m £118m - £