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Profits up 45% at Breedon despite mixed year in Scotland

Alan Mackenzie, CEO of Breedon Aggregates Scotland.
Alan Mackenzie, CEO of Breedon Aggregates Scotland.

Profits rose more than 45% at Breedon Aggregates in 2015 as the building materials firm’s Scottish division overcame a “mixed” year to deliver record results.

Demand for Breedon’s products was strong in Scotland in the first six months, but was weaker in the second half due to flooding in the north-east, project delays and reductions in spending on roads by local authorities.

Overall, trading conditions remained stronger in England, though Breedon’s Scottish business was given a lift late last year when the group won its biggest ever contract.

In a 50/50 joint venture, Breedon and Northern Irish firm Whitemountain won a £55million contract to supply and lay asphalt on the £745million Aberdeen city bypass.

Alan Mackenzie, chief executive of Breedon’s Scottish business, said the company is currently setting up an asphalt plant along the route with a view to commencing supply late in the second quarter of 2016.

And Breedon will start supplying materials for the first phase of dualling work on the A9 Perth to Inverness in the coming months.

Mr Mackenzie said the those projects would “underpin” the business for the next two years and confirmed Breedon would bid for future developments in Aberdeen, such as the new conference centre and harbour expansion.

He said Breedon had hoped to start providing tarmac for the Aberdeen bypass and A9 earlier, but that the length of time taken to commission the projects had pushed its involvement into 2016.

Despite the project delays, Breedon’s Scottish business still managed to shift 32% more aggregates volumes and 21% more concrete than in 2014, driving revenues up 18% to £147.6million in the year to the end of 2015.

Mr Mackenzie said the impact of delays and cuts in local authority spending was offset by falling fuel prices.

He also said wind farms were still on Breedon’s agenda in Scotland, where the group operates 38 quarries, 17 asphalt plants and 37 ready-mix concrete plants, employing more than 700 people.

The company is currently involved in wind farm projects in Ayrshire but is interested in new opportunities in the Highlands.

Mr Mackenzie said: “We believe clients are looking to upgrade to bigger turbines, which means bigger bases will be needed. That will continue for another two to three years, not fall away as quickly as we’d expected.”

Pre-tax profits at the group as a whole soared to £31.3million in 2015, from £21.4million previously, on revenues of £318.5million.

Group chairman Peter Tom said he was “tremendously excited by the future potential” for Breedon in light of its Aberdeen city bypass contract and the group’s £336million takeover of rival Hope Construction Materials.

The deal for Hope, which has more than 150 operational sites, is expected to be completed half way through this year.