Bottom Line: Polypipe quality

POLYPIPE'S performance has been relentless through boom and bust, with earnings and dividends rising every year since flotation in 1985. Investors who jumped aboard the plastic pipe maker at the outset have seen their shares rise fifteenfold in nine years.

Yesterday's interim figures, showing pre-tax profits 16 per cent higher at pounds 7.45m, earnings 15 per cent up at 3.2p and the dividend increased by 8 per cent to 0.71p, were more of the same.

There is no mystery about how Polypipe has left its competitors standing. Unlike many of them, who reacted to lower demand by battening down the hatches and waiting for an upturn, Polypipe has invested throughout the recession. During the first half it did so at twice the rate of depreciation.

Since 1989 it has diversified into growth areas, bought companies wisely (often from the receiver) and taken market share from both other plastic pipe makers and traditional clay products.

Success at passing on rises in the price of raw materials, mainly PVC, should ensure that forecasts of pounds 19m pre-tax profits in the year to June are achieved. Earnings per share of 8.2p imply a prospective p/e ratio of 21. Not cheap, but a fair reflection of quality.