REG - Grafton Group PLC - Trading Update

GraftonAnnouncement

04/05/2023 07:00

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RNS Number : 3451Y  Grafton Group PLC  04 May 2023

Grafton Group plc

Trading Update

 

Resilient Q1 Performance in Line with Expectations

 

Grafton Group plc ("Grafton" or "the Group"), the international building
materials distributor and DIY retailer, issues this trading update for the
period from 1 January 2023 to 23 April 2023 ahead of the Annual General
Meeting of the Company that will be held at 10.30am today in the Irish
Management Institute (IMI) Conference Centre, Sandyford Road, Dublin 16, D16
X8C3, Ireland.

 

Shareholders can find details of how to attend the AGM virtually in the AGM
Circular which can be found at
https://www.graftonplc.com/investors/shareholder-services/shareholder-meetings/
(https://www.graftonplc.com/investors/shareholder-services/shareholder-meetings/)

 

Highlights

 

·      Performance in the first quarter in line with expectations

·      Maintaining full year operating profit guidance

·      Third share buyback programme for up to £50 million announced

·   Grafton remains in a very strong position due to its robust balance
sheet, geographic diversity and market leading positions

 

Performance and Trading

 

The Group's overall performance in the first quarter of the financial year was
in line with expectations, with Group revenue in the period to 23 April 2023
at £704.3 million, up 2.8 per cent from £685.4 million in the prior year.

 

March trading was a little softer than anticipated with sales of seasonal
products in Ireland and the UK adversely affected by wet weather conditions.
 

 

Volumes were lower than in the same period last year in the Group's
distribution markets in the UK, Ireland and Finland and were ahead in the
Netherlands.  Timber and steel price deflation contributed to a moderation in
the rate of building materials inflation in our Irish and UK distribution
businesses.  Lower demand for plants and gardening products contributed to a
small decline in revenue in the retailing business in Ireland. Strong revenue
growth in the UK manufacturing business was driven by volume gains and the
recovery of increased input costs.

While we remain alert to macroeconomic headwinds impacting our markets, we are
maintaining our operating profit expectations at this relatively early stage
of the year.

 

Segmental Trading

 

The table below shows the changes in average daily like-for-like revenue and
in total revenue for the period from 1 January 2023 to 23 April 2023 compared
to the same period last year.

 

 Segment        Average Daily Like-for-Like Revenue Growth*  Total Revenue
                Constant                                                         Actual

                Currency                                                         (Sterling)
                Period to 23 April                           Period to 23 April  Period to

                2023 v 2022                                  2023 v 2022         23 April

                                                                                 2023 v 2022

 Merchanting
 - UK           (4.3%)                                       (4.1%)              (4.1%)
 - Ireland      (2.2%)                                       (1.0%)              4.5%
 - Netherlands  5.4%                                         6.5%                12.4%
 - Finland      0.0%                                         1.2%                6.8%
 Retailing      (1.1%)                                       (2.0%)              3.5%
 Manufacturing  10.0%                                        9.9%                10.3%
 Group          (1.0%)                                       (0.5%)              2.8%

          *Constant currency

 

UK Distribution

Revenue declined in Selco in a more challenging macroeconomic environment as
households cut back on discretionary spending including non-essential RMI
projects. The rate of building materials price inflation moderated to 5.5 per
cent in the first quarter.  A new Selco store was opened in Peterborough in
April bringing the estate to 75.  Leyland SDM delivered a strong performance
building on the progress made in the second half of 2022.  A new Leyland SDM
store was opened in Hammersmith in February and a new store in Crystal Palace
is scheduled to open later this year.  Revenue declined in the MacBlair
distribution business in Northern Ireland against the backdrop of a weaker
economic environment and lower activity in the new housing and RMI markets.

 

Ireland Distribution

 

Chadwicks operated at high levels of activity in a market that continued to be
supported by strong demand fundamentals.  New build activity was more
resilient in the scheme housing and commercial construction markets with a
softening of demand experienced for materials supplied for the construction of
single homes and RMI projects.

 

Netherlands Distribution

 

Isero performed strongly despite the decline in existing housing transactions
and slowdown in new home construction.  Collected branch revenue increased as
customers transferred from new build to repair and maintenance projects.
Revenue from key account customers engaged on large commercial construction
projects was also higher.

 

Finland Distribution

 

Revenue was flat in IKH as growth in the Finnish economy stalled and house
building started to slow in response to weaker demand.

 

Retailing

Revenue was marginally lower in the Woodie's DIY, Home and Garden business in
Ireland reflecting a positive start to the year and lower demand for seasonal
categories in March.

 

Manufacturing

 

Double digit revenue growth in CPI Mortars was driven by the recovery of input
cost increases.  Demand was resilient for dry mortars supplied to the new
housing market and volumes held up well while demand was somewhat weaker for
packaged ready-to-use products supplied to the residential RMI market.
StairBox continued to outperform and increased the volume of bespoke
staircases supplied to the secondary housing
market.

 

Share Buyback

 

The Board today announces that it intends to introduce a third programme to
buy back ordinary shares in the Company for an aggregate consideration of up
to £50 million, reflecting its confidence in the prospects for the Group,
strong balance sheet and cash generation from operations, while at the same
time retaining significant capacity to invest in strategic growth
opportunities.

 

The launch of any programme is subject to shareholder approval of the
resolution to be proposed at today's Annual General Meeting to buy back up to
10 per cent of the Company's ordinary shares.

 

The share buyback programme is expected to complete during 2023 though the
actual timing will be based on an ongoing assessment of general market
conditions and further details will be announced in due course.

 

Eric Born, Chief Executive Officer of Grafton Group plc commented:

 

"Our resilient Q1 performance reflects the strength of Grafton's diversified
businesses and proximity to customers through its federated structure. The
experienced management teams across the Group's portfolio of high-quality
businesses have the capability to respond effectively to any changes in
trading patterns that may emerge as the year develops.

 

"Since joining the Group five months ago, I have spent significant time
working with colleagues in our businesses to refine our development plans
whilst also visiting many potential acquisition opportunities in European
markets and I remain confident about the medium-term prospect of increasing
shareholder value."

Ends

 

For further information please contact:

 Investors                                   Media

 Grafton Group plc  +353 1 216 0600          Murrays         +353 1 498 0300

 Eric Born          Chief Executive Officer  Pat Walsh
 David Arnold       Chief Financial Officer
                                             Buchanan        GraftonGroup@buchanancomms.co.uk

                                             Helen Tarbet    +44 (0) 7872 604 453

                                             Simon Compton   +44 (0) 7979 497324

 

 

 

About Grafton

 

Grafton Group plc is an international distributor of building materials to
trade customers and has leading regional or national positions in the
distribution markets in the UK, Ireland, the Netherlands and Finland. Grafton
is also the market leader in the DIY, Home and Garden retailing market in
Ireland and is the largest manufacturer of dry mortar and bespoke timber
staircases in the UK.

 

Grafton trades from circa 360 branches and has circa 9,000 colleagues. The
Group's portfolio of brands includes Selco Builders Warehouse, Leyland SDM,
MacBlair, TG Lynes, EuroMix and StairBox in the UK; Chadwicks and Woodie's in
Ireland; Isero and Polvo in the Netherlands; and IKH in Finland.

 

For further information visit www.graftonplc.com (http://www.graftonplc.com)

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