Plumbing, heating and drainage merchant the BSS Group plc reports total revenue up 0.9%year on year in the interim management statement, issued this morning.
Total revenue for the 19 weeks from 1 October 2009 to 10 February 2010 was £473.4m, a rise of 0.9% on the same period a year ago. Like for like revenue, excluding the impact of new branches and acquisitions, however, was 2.1% below last year, although this is a better performance than the 6.8% drop in the six months to 30 September 2009.
Cold weather in December helped the Domestic Division – which includes F&P and PTS – as repair and maintenance activity increased with boiler usage. The snow disruption in January caused some loss of business, mostly domestic contract work, but this impact was offset by December’s better performance.
Gross margin in terms of percentage is lower than last year, reflecting the competitive market conditions and stronger contract sales. The group says is is continuing to focus on margin recovery and believes that price conditions are showing signs of stabilising.
Like for like costs in the period were 5.2% below last year (against a 7.8% decrease in the six month period to 30 September 2009).
With government capital expenditure – currently accounting for around 10% of group revenue this year ¬- likely to reduce significantly in the coming years, BSS is pursuing new revenue streams to offset the expected reduction in public sector activity.
Direct Heating Spares is moving to seven day operations on the back of contract gains and stronger underlying demand; 12 new drainage implant branches have been opened to support the expansion into the above ground drainage market. A further six are to be opened in February and March. This week’s acquisition of UGS Limited will strengthen this expansion and help the group to service the broader drainage market (above and below ground) which it believes has significant growth potential.
Renewables revenue continues to grow at pace and the first orders have been received in support of the water industry upgrade which will be serviced from our dedicated distribution facility in Nottingham.
“BSS remains well positioned to take advantage of early cycle recovery in economic activity in new build residential and the manufacturing sectors,” the statement reads. “Our core business continues to be the repair and maintenance of existing facilities with a significant proportion of our revenue from medium to long term contracts. We therefore expect revenue for the balance of the year to continue to show resilience.”
The Board expect profits to be in line with market expectations for the year ended 31 March 2010 and the financial position of the Group to strengthen further in the current financial year.