Aug. 18 (Bloomberg) -- Polypipe Group Plc, the largest British manufacturer of piping systems for houses and roadworks, posted higher first-half earnings, helped by a booming property market and as the wettest January in England since 1766 boosted demand for flood alleviation measures.
Operating profit excluding some items gained 29 percent to 22.7 million pounds ($38 million), the Doncaster, England-based company, which sold shares in an initial public offering earlier this year, said in a statement today. The stock gained as much as 5.1 percent in London trading.
The company saw rising demand for its pipes because U.K. home prices surged to a record last month as sales reached the highest in seven years, according to researcher Acadata. Polypipe’s residential business represents about half of the company’s sales.
Revenue gained 11 percent to 168.2 million pounds. Sales in the company’s water management solutions unit rose “sharply,” it said, without giving a specific number.
Britain was drenched in 486.8 millimeters (19 inches) of rain early this year, reducing the value of about 5,800 homes in towns located along the River Thames. As a result, some of Britain’s wealthiest districts including Chertsey, Egham and Datchet ramped up efforts to alleviate and prevent further flooding.
The stock gained as much as 12 pence to 248 pence as was up 3.3 percent as of 3:10 p.m., valuing the company at 488 million pounds. The shares have lost 0.4 percent since their April IPO.
Polypipe said today it wants to expand into making new products including a range of cable-protection ducting for high-voltage systems. This could help prevent future floods from creating hazards, which Ireland’s Electricity Supply Board said caused power outages in hundreds of thousands of homes in February.
Canaccord analyst Mark Howson said while Polypipe’s water management business only accounts for 8 percent of its total revenue, the unit helps the company to outperform the general U.K. construction market.
“It’s important that they’re growing in that area. If you’ve got something like 8 percent or 10 percent of your business, and it’s growing at 20 percent, that’s going to help you outperform the U.K construction cycle,” he said.
The company posted a first-half loss of 1.75 pence a share after a profit of 3.95 pence a share a year earlier, partly because of costs related to the IPO.
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