Manufacturer reports 8% rise in revenues but remains vigilant due to political and economic uncertainty

Revenue for the ten months ended 31 October  was 8.2% higher than the prior year at £400.6m (2016: £370.3m), and 7.1% higher on a like for like basis. Like for like revenue growth in the four months to 31 October was higher than that recorded in the first half of the year at 7.3%.

The firm said that this rise was possible through strong organic growth in UK residential systems and mainland Europe segments, helped by relatively buoyant new house building activity.

Martin Payne, chief executive, said: “”Whilst the UK new housebuild market continues to perform well helped by increasing demand for our water management and attenuation products, commercial, infrastructure and RMI markets remain challenging.

“Against this backdrop, the Group continues to deliver strong organic growth ahead of the overall UK construction market, demonstrating the resilience of its balanced exposure to the different sectors within that market, and the continued success of its strategic growth pillars of legacy material substitution and legislative tailwinds in water management and carbon efficiency. Whilst we remain vigilant in the face of continued political and economic uncertainty, we believe the Group is well placed to achieve management expectations for the full year.”

UK operations achieved revenue growth of 6.4% in the ten months and the price increases implemented progressively throughout the first half of this year accounted for approximately 3%, leaving volume growth at 3.4%, ahead of the market.

The update said: “Revenue in our UK Residential Systems segment increased 9.9% compared to the same period last year, driven by continued strong demand from new housebuild, with strong underground demand beginning to be matched latterly by strengthening demand for above ground products as developers start to build out newly developed sites.”

Polypipe said that both private and public RMI markets remained difficult. Its manufacturing facility in Dubai remains closed and “the Qatar situation shows no sign of improving.” A limited number of small projects outside Qatar continue to be supplied from Dubai and the situation regarding manufacturing in Dubai remains under review.

Second half UK operating margins will be higher than in the equivalent period in 2016 following first half price increases to recover post EU Referendum polymer and other inflationary cost increases. However, further polymer cost inflation driven by currency movements and tightening global supply during the year means that full year operating margins in the UK will be behind the prior year. Further price increases are planned for the new year to recover this cost inflation.

In mainland Europe, revenues were 19.9% ahead of the prior year, and on a like for like basis was 11.2% ahead. The update said: “The general economic environment in France continues to be helpful with our business capitalising on this and performing well. The business continues to be profitable but at lower margins than the UK.”