Polypipe (LON:PLP) has expounded a consistent strategy since its return to the market in April 2014. The latest set of results further demonstrates that its above market growth focus is delivering good year-on-year profit progress while at the same time occupying strong positions in sectors exhibiting favourable long-term trends. Following recent share price rises, the FY17 P/E rating has risen to 14.7x and we expect Polypipe to sustain a premium rating.
Results slightly above estimates
FY16 came in slightly ahead of our expectations with PBT of £61.8m, EPS 25.0p and DPS 10.1p (vs estimates of £61.3m, 24.6p and 10.0p respectively). Polypipe achieved underlying revenue growth in all three reported operating segments, enhanced by the Nuaire acquisition (annualised) and some FX translation benefits. We also note the margin expansion achieved in UK operations. Investment and new product development have consistently underpinned the company’s strategy of aligning the business with themes and segments offering long-term growth prospects. Year-end net debt of c £164m was also better than anticipated with a good working capital outturn in H2.
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