Breedon cuts full-year outlook after weak H1; shares fall 7%

Investing.com -- Breedon Group (LON:BREE) cut its full-year earnings outlook after reporting a weaker first half of 2025, sending shares down over 7% on Wednesday.

The construction materials company now expects full-year EBITDA to be at the lower end of its projected range, guiding to £291.4 million. 

That figure is about 4% below the current market consensus of £302.8 million, reflecting the impact of project delays, adverse weather and the Liberation Day holiday during the first half.

Revenue for the six months ended June 30 rose 7% year-over-year to £816 million.

However, like-for-like revenue fell 3%, indicating a more challenging environment compared with the first quarter, when like-for-like revenue was slightly higher. Overall volume and mix declined 4%, with pricing described as stable.

By geography, revenue in Great Britain fell 2% year-over-year, or 4% on a like-for-like basis. 

Revenue in the Republic of Ireland declined 7% both in reported and like-for-like terms. Cement revenue dropped 4%, while the U.S. segment saw like-for-like revenue rise 8%.

Group EBITDA for the period came in at £115 million, down 3% from the prior year and 5% lower on a like-for-like basis. 

The EBITDA margin narrowed by approximately 130 basis points to 14.1%, compared to 15.4% in the prior-year period. 

The U.S. saw the steepest margin drop, down 903 basis points. Margins in Great Britain fell 78 basis points, while margins in the Republic of Ireland increased 125 basis points. Cement margins declined 17 basis points.

Underlying earnings per share dropped 19% year-over-year to 11.2 pence. The company declared a dividend of 4.75 pence per share, up 6% from the previous year, representing a 59% underlying payout ratio.

Net debt, including IFRS 16 lease liabilities, rose to £648 million from £472.3 million a year earlier. Covenant leverage increased to 2.2 times from 1.6 times, though the company expects leverage to decline in the second half.

In Great Britain, order inquiries remained high, and the group continued to secure new work, though markets were described as challenging. 

Cement volumes declined slightly due to subdued demand in the ready-mixed concrete segment. The U.K. government has committed to at least £725 billion in infrastructure spending over the next decade.

In the Republic of Ireland, some major projects have been pushed beyond 2025. The longer-term outlook is tied to the country’s €275 million National Development Plan.

In the U.S., operations were affected by extreme weather during the first half. The company said demand and order backlogs remain strong, and it expects growth and margin expansion in the second half.

Lionmark, which was acquired in 2024, performed in line with internal plans and has a committed order book for the rest of the year.

“It is doing the right things in a challenging market, and we believe the things it has done, is doing and will continue to do will yield fruit in due course,” said analysts at RBC Capital Markets in a note.