REG - Genuit Group PLC - Trading Update

GenuitAnnouncement

19/11/2024 07:00

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RNS Number : 6925M  Genuit Group PLC  19 November 2024

19 November 2024

Genuit Group plc

Trading Update

 

Genuit Group plc ("Genuit", the "Company" or the "Group"), the UK's largest
provider of sustainable water, climate, and ventilation products for the built
environment, today issues an update on trading for the ten months ended 31
October 2024. The Company will report its full year results for the twelve
months ending 31 December 2024 in March 2025.

 

Key Highlights

·      Resilient performance, despite subdued market conditions

·      Strong strategic progress in the period, with the Genuit Business
System continuing to build momentum and delivering margin progression despite
lower volumes

·      Continued strong cash generation, with a debt reduction of £5
million since the end of June

·      Market conditions are expected to remain subdued through the
remainder of 2024 and into 2025. As a result, the Board expects full year
underlying operating profit to be broadly in-line with the lower end of
analyst expectations(1)

·      Notwithstanding near-term trends, Genuit is well placed to benefit
from the eventual market recovery and the structural growth drivers to which
the Group is exposed

 

Current trading and Business Update

The Group's trading performance has been resilient since the interim results
were reported in August. In the four months ended October 2024, revenue is
down 1.8% versus prior year on a like-for-like basis.

Group revenue for the ten months ended 31 October 2024 was £471.7 million
(2023: £504.2 million), 6.4% lower than the prior year on a reported basis
and 7.1% lower than prior year on like-for-like basis(2).

 

·     Climate Management Solutions (CMS) revenues were up 1.7% year on
year on a like-for-like basis for the four months ended October 2024. This
performance was driven by strong demand in the residential sector of Nuaire's
ventilation business and an encouraging improvement in sales at Adey in
September and October. Year to date revenues of £135.4 million on a reported
basis, represent a year-on-year reduction of 2.6%, with residential
ventilation strength being offset by subdued commercial ventilation sales and
softness in the market for boiler sales affecting Adey.

 

·    Water Management Solutions (WMS) revenues were down 4.9% on a
like-for-like basis for the four months ended October 2024. Year to date
revenues of £137.7 million on a reported basis, represent a year-on-year
reduction of 7.4%, as a result of several project delays in an uncertain
business environment.

 

·    Sustainable Building Solutions (SBS) sales were down 2.0% on a
like-for-like basis for the four months ended October 2024. Year to date
revenues of £192.3 million on a reported basis, represent a year-on-year
reduction of 8.4%, as a result of subdued new housebuilding and RMI activity.
The business unit has made strong progress in winning new business in the
period, following the withdrawal of a competitor from the UK market, with
additional revenues expected in 2025.

 

·    The two recent acquisitions of Sky Garden and Omnie & Timoleon
contributed £3.5m of revenue in the four months to October 2024. The
integration of these businesses is proceeding as planned and as expected, do
not materially affect profitability in FY24.

 

·    The Group has continued to focus on the deployment of the Genuit
Business System and is making good progress in achieving productivity
improvements that help mitigate the impact of lower volumes and increase
operational gearing of the Group to drive profitability as volumes return to
more normal levels.

 

 

Outlook

 

Underlying operating profit is expected to be broadly in-line with the lower
end of analyst expectations(1), with continuing operating margin progression.

 

Market conditions are expected to remain subdued for the remainder of 2024 and
into 2025. The Group is assessing the impact of the recently announced
increases in employer National Insurance contributions and the National
Minimum Wage, which will add c.£5m to the Group's cost base in 2025. The
Group will seek to mitigate this through productivity and supply chain
improvements where possible, along with balanced price management.

 

Whilst the timing of the eventual market recovery is uncertain, the Group is
encouraged by the UK Government's commitment to significantly increase the
levels of new housebuilding and to the decarbonisation of the built
environment. The Group remains well positioned to capitalise on these
structural drivers.  The Group remains highly cash generative and has a
strong balance sheet providing scope for strategic acquisitions. Leverage is
expected to be c.1.1x at the end of the year.

 

 

Joe Vorih, Chief Executive Officer, commented:

 

"Genuit has delivered a resilient performance in the face of market conditions
that have remained subdued. Against this backdrop, we have made good progress
with our strategy and I am delighted the Genuit Business System has continued
to build momentum. Our focus on efficiency and productivity continues to
support strong margins despite lower volumes.

 

In the near term, we expect the market to remain subdued for the remainder of
2024 and into next year. We are also working through the impact of cost
increases relating to employer National Insurance contributions and National
Minimum Wage on both our own business and the industry.

 

The economic and social imperative to increase levels of construction and
housebuilding in the UK has never been stronger. At the same time, the need to
decarbonise the built environment and adapt to climate change remains clear. I
am confident that Genuit's portfolio of climate friendly, labour saving, and
energy efficient solutions will play a key role in supporting sustainable
growth in the coming years."

______________________________________________________________________________
(1) Genuit compiled analyst consensus forecasts for 2024 show Adjusted
Operating Profit of £92m to £94m

(2) Like-for-like as adjusted for acquisitions and disposals. Group revenue
including Polypipe Italia £6.5m

 

 

 

Enquiries:

 

Genuit Group plc:

Joe Vorih, Chief Executive Officer

Tim Pullen, Chief Financial Officer

+44 (0) 113 831 5315

 

Headland Consultancy:

Chloe Francklin

Matt Denham

Email: genuit@headlandconsultancy.com

Telephone: 020 3805 4822

 

About Genuit Group plc

Genuit Group plc is the UK's largest provider of sustainable water, climate
and ventilation products for the built environment. Genuit's solutions allow
customers to mitigate and adapt to the effects of climate change and meet
evolving sustainability regulations and targets.

The Group is divided into three Business Units, each of which addresses
specific challenges in the built environment:

• Climate Management Solutions - Addressing the drivers for low carbon
heating and cooling, and clean and healthy air ventilation.

• Water Management Solutions - Driving climate adaptation and resilience
through integrated surface and drainage solutions.

• Sustainable Building Solutions - Providing a range of construction
solutions to reduce the carbon content of the built environment.

Across these Business Units, Genuit's brands are some of the most
well-established and innovative in the industry, including Polypipe, Nuaire
and Adey.

The Group primarily serves climate-driven building and construction markets in
the UK, with an expanding presence in Europe, the Middle East and North
America and sells to specific niches in the rest of the world.

 

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