Is the UK ‘construction glass’ half full or half empty? Listening to the Brexit mood music, then one could presume the wheels had fallen off. However, in reality this political hot potato has not on its own yet materially impacted GDP. Grass roots demand remains robust, especially across new build housing and infrastructure. And only 3 weeks ago the Office for National Statistics said the construction industry had enjoyed an ‘Indian summer’, with Q3 output expanding at a 2.1% clip, after experiencing a -1.6% Q1 decline (cold winter) and a 0.8% rebound in Q2 (wet spring).
Likewise, equipment rental specialist Vp is showing few signs of a slowing-down - this morning reporting “another excellent set of results with revenues, profits and EPS all significantly ahead”.
H1’19 turnover, adjusted PBTA, EPS and dividends (see below) all climbed by double-digits to £193.2m (+42%, Est LFL 13%), £25.9m (+22%), 52.3p (+18%) and 8.2p (+21%) respectively. Beating our H1 PBTA estimates by 3%, and providing a comfortable cushion in the event of a future hard-Brexit.
Divisionally, trading at Torrent Trackside (£48bn CP6 rail), TPA (transmission) and Groundforce (AMP6, water infrastructure) was strong, augmented by supportive conditions at Hire Station, UK Forks and Brandon Hire (acquired in Nov’17 for £69.2m). UK adjusted EBITA jumped 21% to £26.9m (95.5% of group vs 97.7% FY18) on revenues 46% higher at £175.3m (margin 15.3%).
Elsewhere, there were also encouraging performances abroad. EBIT rising to £1.3m (vs £0.3m LY) on sales of £17.9m (+14%), reflecting good progress at TR’s (Australian test & measurement firm) depots in Malaysia & Singapore, complemented by “marginally improved activity” in oil & gas (Airpac Bukom).