Brick deliveries fall sharply, materials inflation easing; Mortgage rates still rising but some respite at highest LTV loans | VTY, KLR, SHI

Vistry Group (VTY, 668p, £2,309m mkt cap)

Formed from the mergers of Bovis Homes and housebuilding and partnerships divisions of Galliford Try (GFRD) and Countryside Partnerships. New shared ownership scheme. Contracts exchanged with affordable housing provider Sage Homes, making it one of the first homebuilders to deliver its Home Stepper Housebuilder Shared Ownership model. In partnership, Vistry and Sage, which have a long-established partnership relationship, will deliver an initial portfolio of around 800 shared ownership homes nationally, with a market value of over £250m including both Vistry Housebuilding and Countryside Partnerships homes.

Keller Group (KLR, 704p, £512m)

World’s largest ground engineering group, with 60% exposure to North America. HY (Jun) trading update.

Guidance: “Trading in the first half has remained strong and we anticipate a record performance in the period. Given our trading performance to date, together with our continuing robust orderbook, we expect full year underlying operating profit to be materially ahead of previous market expectations, with the increase in earnings moderated by the impact of recent interest rate increases. Given the timing and phasing of certain contracts, we now expect profit to be more evenly weighted between the first and second half of 2023. We continue to expect the first half net debt/EBITDA leverage ratio to be at the upper end of our 0.5x – 1.5x range and the year-end leverage ratio to be lower than at the prior year end. Given the increase in full year expectations, and in keeping with the Group’s progressive dividend policy, the Board will be announcing a 5% increase in the interim dividend to 13.9p (HY 22, 13.2p).

Trading: North America – The operational improvements outlined in November have continued to be effective and have resulted in a “strong recovery in the operating margin in line with our plans. At Suncoast, whilst production volume has decreased, we have actively managed margins to deliver an improved overall performance year-on-year. This benefit is expected to moderate in the second half”.  Europe – “Whilst cost inflation has stabilised and supply chain issues have eased, the recessionary backdrop has presented some challenges, particularly in North East Europe, leading to some margin erosion and some project delays. Several large projects in the prior period, including HS2 in the UK, provide a challenging comparator for H1 2023”. Asia-Pacific, Middle East and Africa – the new management team at Austral have substantially addressed the remaining issues in the near-shore marine business. “At NEOM [massive planned Saudi Arabian ‘smar city’], we are in advanced discussions with the client in respect of the award of a second works order which is expected to be at least twice the size of the first works order that was completed in February (c. £40m). As previously indicated, the precise phasing of this material project remains subject to variation and will require measured investment in equipment and working capital as it accelerates”.

Outlook: “This significant progress, together with the increased momentum and our robust order book, gives us the confidence to increase our expectations for the year. The underlying strength of the group’s performance provides confidence in our longer-term prospects”. HY results, 1 August.

SIG (SHI, 35p, £408m)

Supplier of energy efficiency and specialist building materials to trade customers across Europe. HY (Jun) trading update.

Guidance: “We expect weak and uncertain demand conditions throughout the rest of the year, along with a continued, but further moderating, revenue tailwind from input price inflation.  Whilst trading in recent weeks leads us to be more cautious as to the timing of any broad-based improvement in demand conditions, the second half will benefit from ongoing productivity initiatives as well as an expected profit on one specific property move.  Consequently, the Board continues to expect full year underlying operating profit within the current range of market expectations, but towards the lower end of that range”.

Trading: Revenue nc Y/Y, £1,424m “reflecting volume declines offset by input price inflation”; u-lying operating profit expected to be c. £33m, “with early impact of productivity initiatives partially offsetting demand weakness and inflationary impact on operating costs”. UK Interiors rev +4%, £381m; UK Exteriors -2%, £221m; EU -1%, £822m. “Market conditions were challenging across our geographies, including a notable softening in demand in France and Germany in the last two months.  Volumes and market conditions were notably weaker in Poland and Ireland over the period as a whole, with both also coming up against especially strong prior year comparators”.

Outlook: “Notwithstanding short-term market weakness, we continue to progress the strategic and operational initiatives which underpin our ambition for the group.  As a European market leader in the supply of specialist insulation, and with 80% of the Group’s sales covering insulation and the wider building envelope, we are well-positioned to benefit from long-term structural growth drivers, notably sustainable construction and decarbonisation of buildings.  We also remain confident in our ability to further improve our market positions, and to continue to improve our profitability when market conditions recover”. HY results, 8 August.