Piping system manufacturer Polypipe (PLP) gained 10.5% to 505p as it upgraded its annual profit guidance, citing a continued recovery in demand.
Underlying operating profit for the year to 31 December was now expected at around £40 million, compared to the current consensus range of £35 million-£37 million.
Revenue during the month of November had risen 8% year-on-year with a particularly strong performance from residential markets.
STILL BELOW PRE-COVID LEVELS
However, even after today’s surge in the share price, the stock remains below the levels above 600p it was trading at before the coronavirus crisis.
‘Operating margins continue to benefit from the drop through on this improved volume, although they are still not back to normal levels due to operating inefficiencies caused by Covid-19,’ Polypipe said.
‘The group enters the new year with a strong order book and some cautious optimism, although uncertainty currently exists about the effects of a no-deal Brexit.’
The company has a good track record of outperforming its markets. In the 2009 recession, earnings before interest, tax, depreciation and amortisation (EBITDA) declined by just 10%.
It also has a flexible cost base which can be adjusted at speed in response to fluctuations in the market.
There was no mention of whether or not the company would pay a full-year dividend, something it signalled as being likely alongside its half year results in September.
