No Brexit concern for underfloor heating manufacturer Polypipe

Oliver Gill
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Over half of Polypipe's revenues are generated by its residential property division (Source: Getty)

Polypipe broke its own records when releasing Olympic half-results this morning, which revealed half-year profits had spiked nearly 50 per cent.

The figures

Revenues for the six months to June were £223m, up from £170m. Operating profit margins climbed from 15.1 per cent to 16.9 per cent.

Earnings per share were 12.0p, up from 9.1p in 2015.

Interim dividends at the FTSE 250-company rose 35 per cent – from 2.3p per share to 3.1p per share.

Operating cash flow soared by 71 per cent from £17.8m to £30.5m

Why it's interesting

With plenty of rhetoric of "challenging markets" in the wake of low oil prices and the Brexit vote, Polypipe said that business was largely unaffected. "Order intake has remained consistent with the normal seasonal pattern and [is] yet to show any signs of weakening following the EU referendum," it said.

Polypipe was also encouraged by comments from the government that stimulus is needed in the construction sector – commercial and infrastructure revenues grew by 57 per cent from £59.1m to £92.7m.

Its largest division – residential piping systems – showed more moderate growth, from £90.2m to £105.4m. Sales from this division are only in Britain and Ireland and Polypipe has moved to a higher value (and higher margin) product mix that means that operating profits jumped by considerably more than revenues – up 39.6 per cent at £21.5m.

Read more: Polypipe to pay £145m for rival Nuaire

What Polypipe said:

Chief executive David Hall said:

We have delivered another record performance in the first half continuing the strong momentum from last year. Our strategic focus on the structural growth opportunities, together with the acquisition of our Nuaire ventilation business has accelerated our growth.

Despite the uncertain economic backdrop, the long-term structural drivers of our business remain strong, our balanced business model means that we are not overly exposed to any particular sector and the nature of the group’s production processes enables us to adapt and flex quickly to changes in demand.

The board is confident that the cash generative characteristics of the business and a commitment to remain agile will enable the group to continue to develop and outperform, whatever the market conditions.

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