26th Mar 2020 09:29
(Alliance News) - Construction materials firm Breedon Group PLC on Thursday said it remains financially strong as Covid-19 begins to squeeze trading.
Breedon made no comment on its dividend, with a swathe of UK-listed firms halting payouts amid the outbreak. Breedon earlier March said it was targeting a maiden dividend for the first half of 2021.
As of March 25, Breedon had GBP335 million of drawn debt, cash of GBP60 million, and an undrawn facility of GBP220 million. Leverage was well within covenants as of December 31.
"We have conducted stress testing of the group's liquidity requirements under different scenarios, assuming the completion of the CEMEX acquisition, and believe that headroom will remain adequate for our needs under those scenarios, particularly in light of the robust actions we are taking to manage our cost base and preserve cash," said Breedon.
"We have strong relationships with our group of banks, with whom we have been in regular dialogue since the onset of Covid-19 and who are being highly supportive."
Breedon also said the GBP178 million CEMEX deal could now take longer than expected to complete. Breedon is buying the UK assets of Mexican building materials peer CEMEX.
On trading, Breedon said performance had been in line with expectations until the last week, with demand falling immediately and significantly after the UK government brought in social-distancing measures to halt the spread.
Production at UK sites has now closed except the Hope cement plant in Derbyshire as well as at those deemed part of critical supply.
"The group is well invested, which has enabled us to immediately restrict capital expenditure solely to committed and critical projects without compromising the longer-term performance of our operations," said Breedon.
"In addition, we have halted all discretionary expenditure and continue to apply robust discipline to our management of working capital. We will make full use of any government support, including tax reliefs and other forms of financial aid, as they become available."
Shares were 5.3% lower on Thursday morning in London at 64.75 pence each.
By George Collard; [email protected]
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