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Business news

Breedon mines new CEO from rival Aggregate

August 27 2015

Quarrying and materials group Breedon Aggregates has appointed industry veteran Pat Ward as its new chief executive. He is expected to join the group early next year after details of his departure from industry rival Aggregate Industries (AI) are finalised. Mr Ward took over as CEO of AI in April last year following a long career in the aggregates and construction industries in the UK, US and Middle East. Shares in Breedon, which has its Scottish headquarters at Ethiebeaton quarry in Angus, were marginally ahead in early trading yesterday after the change was confirmed. Mr Ward will succeed Simon Vivian who has led Breedon since it was first formed. He will take a non-executive director role on the board. Mr Ward said he was looking forward to playing his part in the “next leg of Breedon’s journey”. He added: “I’m delighted to be joining the UK’s largest independent aggregates business, having watched with interest the great progress made by Breedon since 2010.” The outgoing CEO said it was the right time for a change. Mr Vivian said: “While moving on is always difficult, I’m convinced now is the right time for me to do so. I’ve known Pat for many years and am delighted he is succeeding me at such an exciting time in Breedon’s development.” Breedon employs around 700 staff in Scotland and operates 38 quarries, 17 asphalt plants, 36 ready-mixed concrete plants and two concrete block plants north of the border. It also has a 37.5% stake in Scottish trunk roads operator Bear Scotland. Chairman Peter Tom said Breedon’s Scottish and English units, led respectively by Alan Mackenzie and Tim Hall, would remain operationally autonomous once Mr Ward was in place. “Under Pat’s direction, they will retain full operational control of their respective businesses and continue to play a prominent role in the growth and development of the group,” Mr Tom said. “Simon leaves the company in great shape and in good hands. “We’re particularly delighted that he will remain with us as a non-executive director, enabling us to continue to take advantage of his experience and counsel.”

Business news

Record year for Breedon Aggregates

March 10 2016

Breedon Aggregates, the UK’s largest independent aggregates business, has delivered record results for 2015 with pre-tax profit up 46% at £31.3 million. The firm, which has its Scottish headquarters at Ethiebeaton Quarry north of Monifieth, operates 53 quarries, 26 asphalt plants, 61 ready-mixed concrete plants and three concrete block plants. Its £55m order for asphalt on the Aberdeen Western Peripheral Route during the year was its largest ever contact. The 28-mile dual carriageway round the Granite City is projected to cost £745m and is due to be completed in 2018. Work on the new roadway will secure Breedon’s business north of the border until 2018. Revenue was up 18.1% at £318.5m in a year in which the company sold 13% more aggregates, 20% more asphalt and 12.5% more ready-mixed concrete. Acquisitions made in 2014 had performed ahead of expectations, and last year saw provisional agreement to buy Hope Construction Materials for £336m. It is Breedon’s largest acquisition to date and will see its business double. Hope was formed in 2013 with the merger of Tarmac and Lafarge, and its purchase is due to be cleared by the Competition and Markets Authority around the middle of this year. Executive chairman Peter Tom said of 2015: “Our trading performance continued to improve and we again reported record results. “We finalised our largest ever contract win and announced the planned acquisition of Hope Construction Materials. “We are tremendously excited by the future potential for this business.” He continued: “The outlook for our business continues to be encouraging. “The Government remains committed to infrastructure investment. All the relevant forecasting bodies predict modest but sustained growth in construction output over the next few years. “This means a steady growth in demand for our products. Against this background, volumes are expected to recover gradually to pre-recession levels by 2020.” Despite positive prospects, there was increasing concern that global growth could be negatively impacted by the Chinese economy and the slowdown in emerging markets. The British referendum on EU membership taking place in June could also have an adverse effect on growth. Mr Tom said that notwithstanding these issues, Breedon looked forward to the future with confidence.

Business news

‘Good progress’ by upbeat Breedon

November 27 2013

Shares in Breedon Aggregates climbed almost 3% after the firm said full-year profits were likely to come in ahead of City expectations. The company, which has its Scottish headquarters at Ethiebeaton in Angus, said the group’s recent trading performance had been “very encouraging” and it was on track to beat financial forecasts for the full year to December 31. In an upbeat update to the markets, the company also said it had “reason to be optimistic” for the year ahead on the back of new forecasts from the Mineral Products Association which suggested 2% to 4% growth in aggregate volumes next year, a 3% to 5% increase in the ready-mixed concrete market and up to 4% growth in asphalt volumes. Breedon said the forecasts, coupled with a prediction of a return to growth in UK construction output, were more positive than they had been for a number of years and gave the group confidence that it would make further progress next year. Turning to the current year, the company said it had been a strong overall trading period. “Sales volumes of aggregates, ready-mixed concrete and asphalt are all ahead year-on-year in both England and Scotland, assisted by contributions from our acquisitions of Aggregate Industries’ operations in northern Scotland and Marshalls’ quarries in England,” the firm said. “Group sales revenue in the second half of the year has been stronger than in the first half, and the full-year EBITDA (earnings before interest, taxation, depreciation and amortisation) margin is expected to be ahead of the prior year, driven by continuing improvement in the underlying business and the benefit of acquisitions.” However, one major issue that remains to be resolved is a Competition Commission inquiry into Breedon’s £34 million acquisition of Aggregate Industries UK’s Scottish quarries and production facilities. The Office of Fair Trading referred the deal which saw Breedon take control of six active quarries, four asphalt plants and seven ready-mix concrete sites in Tayside, Fife and elsewhere across Scotland to the watchdog in September after concluding it could substantially reduce competition in the supply of primary aggregates, asphalt and ready-mix concrete in a number of regions north of the border. Breedon acknowledged it may be forced to sell off a small parcel of assets in order to assuage any concerns raised by the Competition Commission in its upcoming ruling on the case. “Both the English and Scottish businesses continued to make good progress this year, helped by a general improvement in construction demand and a continued focus on management of costs, prudent investment and careful selection of work,” it said. “The Competition Commission’s investigation into Breedon’s acquisition of Aggregate Industries’ Scottish operations is continuing, and discussion regarding their findings is likely to commence in January. “Breedon continues to believe that there are only minor issues in one product area, which may require disposal of a limited number of individual assets.” The firm the largest independent aggregates business in the UK after the four global majors employs around 1,000 people across the UK, and its overall mineral reserve stands at approximately 400m tonnes.#

Business news

Breedon shares rocked after watchdog warns of possible forced asset sale

February 7 2014

Shares in Breedon Aggregates were rocked yesterday after the competition watchdog warned the quarrying firm it could be forced to sell off a parcel of Scottish assets. The firm - which has its Scottish headquarters at Ethiebeaton in Angus - has been in the spotlight since the Office of Fair Trading called in the Competition Commission (CC) in October to review Breedon’s £34 million acquisition of a string of Scottish quarries and production facilities from Aggregate Industries UK. The OFT yesterday released the interim findings of the (CC) probe which provisionally found that some customers in three areas of north east Scotland could face higher prices as a result of the coming together of the two companies and a lack of alternative suppliers. The regulator yesterday indicated that Breedon - which was already the largest supplier of aggregate products in the region - may be forced to sell off its ready mixed (RMX) concrete plant in the Peterhead area and asphalt plants in Aberdeen and Inverness in order to alleviate the concerns raised during the CC investigation. “The nature of these products means the markets are local - they are expensive to transport and additionally RMX has a short shelf life,” CC deputy chairman Simon Polito, who is chairing the Breedon probe, said. “So the loss of a competitor in even a relatively small area matters when the cost and proximity of the production site are the most important factors for customers and in a market where most prices are negotiated. “Both products are also vital for construction projects and road building. We now want to look in detail at what measures will protect the interests of customers. “This is likely to involve the sale of asphalt and RMX sites in the affected areas.” Breedon completed the contentious Aggregate Industries deal in April last year, taking control of 11 quarries, four asphalt plants, nine RMX plants and two concrete block factories at 18 separate sites across north Scotland. The firm yesterday said it had noted the interim findings of the CC and said it remained in discussion with the regulator. The final binding report is to be published by May 5. “Breedon has 21 days to respond to the provisional findings and will be discussing arrangements for the possible disposals with the Commission, following which it will seek to expedite the sale of such assets as may be required in order to minimise disruption and secure the future of the small number of employees affected.” The company - which is due to release its interim results for the full year to December 31 - said yesterday it had finished 2013 strongly and was confident of making progress during the current financial year.

Business news

Breedon Aggregates gets Hope up as CMA clears mega-merger

July 1 2016

Breedon Aggregates hopes to complete a £336 million mega-merger within weeks after the UK’s competition watchdog indicated its backing for the deal. The group, which has its Scottish headquarters at Ethiebeaton in Angus, initially announced a deal to acquire Hope Construction Materials last November. However, the process of bringing together the two businesses was halted in April when the Competition and Markets Authority (CMA) stepped in after identifying a threat to competition from the combination. Days later, Breedon responded with an offer to sell 14 ready-mix concrete plants that operated within areas the CMA had identified as being at risk of a lessening of competition. The watchdog has now opened a consultation after indicating that Breedon’s undertakings – or a modified version of them – may be sufficient to alleviate its concerns. In total, the CMA identified 27 sites across the UK where it believed the combination of Breedon and Hope could cause an issue within the local marketplace. Of those sites, 15 are operated by Hope and 12 by Breedon and three – Cloddach in Moray and Longman and Inverness in North Invernesshire – are in Scotland. The majority of the plants to be sold come from the Hope portfolio that Breedon is attempting to secure. Two prospective purchasers, The Concrete Company and major industry rival Tarmac, have been earmarked to take over at the sites being divested. The CMA has vetted both potential purchasers and found there was no prospect of a new competition issue arising if the sites pass into their hands. Breedon welcomed the CMA’s decision to consult on its undertakings and said the merger could complete within weeks. “Subject to final confirmation by the CMA following its consultation on acceptance of the undertakings offered by Breedon, Breedon expects to be in a position to complete the Hope acquisition in early August 2016,” the company said in a statement. The merger would create a new giant in the aggregates and cement sector in the UK. Breedon is the largest independent aggregates business in the UK with 140 operational sites and a workforce in excess of 1,200 people. Hope has more than 170 sites and 900 staff. Interested parties have until July 16 to respond to the CMA’s consultation.

Business news

Aggregate effect benefits Breedon

February 13 2013

Quarrying and aggregate supply firm Breedon believes profits will “significantly exceed expectations” after margins continued to improve in the final few weeks of last year. The company, which has its Scottish headquarters at Ethiebeaton in Angus, said market forecasts for the year look set to be significantly surpassed during a finish which escaped the disruptive influence of winter weather. A brief statement to the markets teed-up what the firm expects will be good news when it reports results for the 12 months to the end of December early next month. It said lower depreciation, depletion and amortisation, and an improved contribution from associate businesses like trunk road operator Bear Scotland, had helped profits leading to an even better performance than an encouraging November update had suggested. Analyst Kevin Cammack of Cenkos Securities was enthused by Breedon’s strong finish to the year, and upgraded his pre-tax profit forecast from £4.1 million to around £5.5m. He said he expected revenues would end the year “more or less” as anticipated at approximately £174m, but that pre-tax profits could rise by as much as a third thanks to the aggregate effect of improvements in several “relatively marginal” metrics. Mr Cammack said depreciation would be lower than expected thanks to the spread of capital spend, while interest charges were also below expectations. He said Bear Scotland which is responsible for many of the region’s trunk roads, including the A90 and A92, and also acts as one of the Scotland’s major roadworks contractors had been the main beneficiary of the weather, allowing the subsidiary to increase both its workload and contribution to wider group earnings. The news comes after Breedon failed in its attempts to snap up assets from LaFarge and Tarmac, who were forced to sell off elements of their businesses to comply with a ruling over their proposed construction materials joint venture. “The stock has performed disappointingly since failing to net anything from the Lafarge-Tarmac sell off, but this announcement should remind investors that Breedon is much more than an acquisition platform,” Mr Cammack said. Breedon, which employs around 70 people at its base just outside Monifieth and has also been pursuing opportunities within the renewable energy sector, said revenues were broadly in line with market forecasts. “The EBITDA (earnings before interest, taxes, depreciation and amortisation) margin has continued to improve since the trading update in November 2012, which, together with lower depreciation, depletion and amortisation and an improved contribution from our associates, means underlying profit before tax is set to significantly exceed expectations,” the company said. Shares in the group closed the day up 1.12 at 21.

Business news

Impressive results by Breedon in growth year

March 9 2017

Breedon Group, the major UK construction materials group with Scottish headquarters at Monifieth, has reported another record year. Revenue leapt by 43% to £454.7 million and profit before tax was 50% higher at £46.8m. The group was transformed by its £336m acquisition of Hope Construction Materials, and it also delivered strong group-wide trading performances. Sales and profits in former Breedon Aggregates business were improved, with the figures boosted by the contribution from Hope. Executive chairman Peter Tom said 2016 was arguably the most eventful year in the group’s history. “We completed our largest acquisition to date, invested a record amount in our business, began supplying our biggest ever contract and delivered an excellent financial performance – all against the background of an uncertain economic environment and challenging trading conditions in many of our markets,” he said. “As we look ahead, the Government appears to have finally committed to substantial investment in the UK’s infrastructure. “This, coupled with anticipated growth in the private housing market, is expected to bring significant medium- and long-term benefits to our business.” Breedon also acquired the Sherburn Minerals Group in County Durham, adding two import terminals, four quarries and five ready-mixed concrete plants. Sherburn distributes cement products from Blyth near Newcastle and Dundee. Revenues at Breedon’s northern business covering Scotland were up by 8% at £159.4m with earnings before interest and tax 23.9% higher at £19.9m. Despite the challenging market, the division’s increases in product volumes were helped by additional Scottish Government funding for BEAR Scotland. Breedon began work on two of the largest road surfacing projects being undertaken in Scotland. One was its largest-ever contract award in a joint venture with Whitemountain Quarries to supply and lay asphalt on the Aberdeen Western Peripheral Route. Breedon also began work on the first phase of dualling the A9, with supplies of aggregates and concrete to these projects helping to offset the downturn in the wider Aberdeen market. A refurbished lime filler ball mill was installed new at the Shierglas quarry, near Pitlochry, increasing the capacity to produce lime filler for asphalt plants.

Business news

Record sales and profits for materials firm Breedon

March 8 2018

Construction material giant Breedon Group built up record profits last year due to a rise in the number of residential and infrastructure developments. Breedon, whose Scottish headquarters is at Ethiebeaton, near Monifieth, saw its sales rise from £454.7 million in 2016 to £652.4m for the year ending on December 31. Pre-tax profits increased by more than 50% from £46.8m to £71.2m in a year where the company’s debt dropped by almost £50m to £109.8m. During the year the company sold 16m tonnes of aggregates (2016: 11.4m tonnes), 1.9m tonnes of asphalt — a similar level to 2016 — and 3.3m cubic metres of ready-mixed concrete (2016: 1.9m cubic meters). In December the group announced its biggest ever deal — valued at £16.5m — to acquire four quarries and an asphalt plant from Tarmac. Commenting on the results, Breedon’s executive chairman Peter Tom said: “2017 was one of the most productive years in our history. “We completed the integration of our largest-ever acquisition, concluded two bolt-on purchases and announced an important transaction with Tarmac that, subject to approval by the competition authorities, will see us streamline our ready-mixed concrete network in exchange for a substantial new reserve of minerals and a strategically valuable asphalt plant. “This did not, however, distract us from our operational focus and we once again delivered a solid financial performance. “Our business is in great shape and we are well positioned to benefit from the medium-term growth in residential and infrastructure development, to which the majority of our material is supplied. “We look to 2018 and beyond with confidence and optimism.” In the deal with Tarmac, Breedon will take over the Daviot Quarry in Inverness and quarries in Cumbria, North Wales and a site in West Wales which also has an asphalt plant. In settlement of the agreed price, Breedon will transfer 27 of its ready-mixed concrete plants and a payment of £4.9m in cash to Tarmac, which is owned by global group CRH. Breedon operates the country’s largest cement plant, two cementitious import terminals, around 60 quarries, 26 asphalt plants, nearly 200 ready-mixed concrete plants and three concrete products plants nationwide. The group employs around 2,200 people and has around 750m tonnes of mineral reserves and resources.

Business news

Breedon cements market position

December 1 2016

Construction materials group Breedon has cemented its market position with a multi- million pound swoop for Sherburn Minerals Group. The company, which has its Scottish headquarters at Ethiebeaton in Angus, has acquired the County Durham based heavyside building materials firm in a deal worth up to £15.7m. While significant, the acquisition is much smaller than Breedon’s £336m capture of Hope Construction Materials earlier in the year. That deal only went through after the Competition and Markets Authority cleared a plan forcing Breedon to sell off 14 sites in order to alleviate competition concerns. The latest buy-out will see four Silverburn operated quarries and five ready-mixed concrete plants across the north of England join Breedon Group. The company’s import terminal at Dundee – a facility that is used to distribute cement products – is also part of the sale along with a second import facility at Blyth in Northumberland. Silverburn’s 110 staff are all being retained and will transfer to Breedon under TUPE regulations. Breedon said the purchase price was made up of £9.5m in cash from its existing group resources, £6m of assumed debt and a further £200,000 due one year after completion of the deal. Sherburn reported underlying earnings before interest, taxation, amortisation and depreciation of £1.8m from revenues totalling £16.1m in the year to March 31. Breedon said Silverburn had mineral resources and reserves exceeding 21m tonnes at the time of purchase along with “significant cement storage capacity” at Dundee and Blyth. Breedon Group chief executive Pat Ward said the Silverburn deal boosted its national geographic footprint whilst also bolstering its cement products operation. “Following our acquisition of Hope earlier this year, which significantly expanded our geographical footprint in the north of England, Sherburn is a perfect infill acquisition for us. It gives us additional mineral reserves and access to new markets for our aggregates and concrete, as well as a first-rate workforce," he said. “It also complements our existing cement plant at Hope and will enable us to expand our cementitious business through the importation of cement and ground granulated blast-furnace slag (GGBS) through Sherburn’s two strategically located terminals in north-east England and eastern Scotland.” Following completion of the acquisition Paul Allison, Sherburn’s current managing director and a minority shareholder, will remain with the business as a consultant.

Business news

Breedon Aggregates must sell if Hope Construction Materials deal is to happen

April 13 2016

Breedon Aggregates will have to sell some of its ready-mix concrete sites in Scotland and England for its £336 million deal for Hope Construction Materials to go ahead. The producer of materials for the construction of roads, bridges, buildings and infrastructure has a major presence in Tayside and Fife. It has a dozen sites in the area providing asphalt, concrete and rock, with its Scottish headquarters at Ethiebeaton Quarry north of Monifieth. Hope’s Scottish sites are mainly across the central belt. Breedon and Hope are major competitors in ready-mixed concrete (RMX) and operate more than 200 RMX sites across England, Wales and Scotland. The Competition and Markets Authority’s (CMA) initial investigation of the proposed merger ruled out any competition concerns over the production and supply of aggregates. It also had no concerns about the potential for the merged companies to restrict the supply of aggregates or cement to rival suppliers. The transaction has given rise to competition concerns over 27 of the 200 RMX sites where the two companies compete as suppliers of ready-mixed concrete. In these areas local customers might face higher prices as a result of the merger. The CMA ordered an in-depth phase two investigation unless Breedon offers undertakings to address the competition concerns. Leicestershire-based Breedon noted the CMA’s announcement that there is a realistic prospect of a substantial lessening of competition in a limited number of local ready-mixed concrete markets. Breedon said it expected that outcome, and the company now has a short period to address the CMA’s outstanding concerns. “Subject to agreement with the CMA on appropriate remedies, Breedon expects to complete the acquisition later this summer in line with previous guidance,” the company added. It is thought Breedon will have to dispose of between 12 and 15 RMX sites to satisfy the CMA. A company spokesman said: “We are not yet in a position to discuss the specific locations involved.” Sheldon Mills, CMA senior director of mergers, said: “The vast majority of the merger raises no concerns.” Breedon Aggregates is the largest independent aggregates business in the UK with 140 sites and employing approximately 1,200 people. Hope has more than 170 sites and 900 employees.