Signs of improving momentum in the business and guidance suggesting the company could return to the dividend list at the full year stage helped lift piping systems manufacturer Polypipe (PLP) 7% to 436.5p.
The company posted a steep drop in first-half profit and scrapped its interim dividend citing softer trading amid the Covid-19 pandemic.
Pre-tax profit for the six months through June slumped 93% to £2.3 million, down from £31.4 million for the same period a year ago, as revenue dropped 22% to £173.6 million.
Polypipe said overall trading had been ‘resilient’ and that there had been a progressive improvement from April’s low point which saw revenue 66% below the prior year.
June revenue was 19% down with an improving trend into July and August, during which revenue was down 6% and 3%, respectively.
TRACKING WELL AHEAD OF BEARISH SCENARIO
The company said its performance in July and August meant it was tracking well ahead of the operating scenario set out at the time of its £120 million equity raise in May.
Chief executive Martin Payne commented: ‘We have a balanced exposure to the different elements of the UK construction market which provides resilience, and strong medium-term growth drivers.
‘Whilst we remain mindful of the various risks to the UK’s economic recovery, I am confident the group is well positioned for the future.’
Shore Capital analyst Graham Kyle said: ‘No interim dividend, as we had expected, but management has signalled that a FY20 final dividend is likely.
‘Whilst we like the longer term fundamentals of Polypipe’s underlying businesses we think the recent equity placing was opportunistic and dilutive for shareholders.’
