In a newly released trading update, Polypipe has reviewed its profit expectations down, as weather conditions slow business.
Strong results in 2018 and short term political and economic uncertainty impacting the market saw modest revenue growth for the group (up 1.7% compared to 2018) in the four months to November 2019.
Since the end of October, this has been compounded by flooding and poor ground conditions, most notably in the North and the Midlands, that means contractors and developers have not been able to access sites for civils and groundworks activities
Against this backdrop, the Board now expects underlying operating profit for the year to be just below its previous expectations
The company remains positive and optimistic for its longer-term prospects however, calling its performance "resilient in tough markets". The Group's revenue is so far 4.3% higher than last year at £381.7m (2018: £365.9m)
Performance in the residential systems segment in the four months ended 31 October 2019 was broadly consistent with the first half of the year with revenue 7.9% higher than the prior year.
In particular, Manthorpe Building Products, which was acquired in October 2018, is performing ahead of expectations and the integration programme remains on track to be completed by the end of the year as planned. This leaves revenue for the ten months ended 31 October 2019 8.2% higher than the prior period.
In the four months ended 31 October 2019, the Commercial and Infrastructure Systems segment saw revenue decline by 5.8% compared to the strong results of previous year.
Trading became tougher in this period with performance impacted by increased project delays in the UK commercial construction sector as political and economic uncertainty impacted investment decisions, partly offset by a good performance in Roads and contributions from Permavoid, acquired in August 2018, as well as the recently acquired Alderburgh, both of which are performing to expectations.
Revenue for the ten months ended 31 October 2019 is 0.6% lower than prior year on a reported basis after benefitting from a good first half performance.
Martin Payne, Chief Executive Officer, commented: “Despite increasingly challenging market conditions and the impact of the recent severe weather, we still expect to report good growth in profits, albeit just below our previous expectations.
“Fundamentals in the Group’s markets remain strong, with a structural housing shortage, historically low interest rates, real wage growth and near full employment which means that we view our future prospects with confidence”.