Slower activity in the UK repair and maintenance (RMI) sector is unlikely to hamper the progress of quarry and building materials group Breedon Aggregates (LON:BREE), according to broker Cantor Fitzgerald.
“Outside of a marked deterioration in the UK weather or RMI spending, we see Breedon’s prospects for the remainder of this year and beyond as strong,” it said.
Major building materials outlets such as Travis Perkins and Wolseley have noted weaker RMI sales trends recently but Breedon had strong momentum in the first half and Cantor expects this to continue over the remainder of the year.
Low oil prices and subdued price pressure saw underlying profits [EBITDA] jump by 54% to £27.3mln in the six months to June.
During that period, the group sold 4.5mln tonnes of aggregates (3.6mln tonnes), 0.9mln tonnes of asphalt (0.7mln) and 0.4mln cubic metres of ready-mixed concrete (0.3mln) as the benefits of its acquisition-driven strategy continued to kick in.
Breedon may also announce another acquisition with its trading update in November, Cantor suggests.
Since new management took the reins in 2010 the company has made eight purchases and makes no secret of its ambitions to continue as a consolidator in the smaller/medium end of the UK aggregates sector.
Buy with a target price of 60p is Cantor's view.
Shares rose slightly to 55p.