REG - Grafton Group PLC - Trading Update

GraftonAnnouncement

14/11/2023 07:15

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RNS Number : 3055T  Grafton Group PLC  14 November 2023

Grafton Group plc

Trading Update

On Track to Deliver Full Year 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 July 2023 to 31 October 2023.

 

Highlights

 

·      Resilient trading despite more challenging markets

·      Grafton remains on track to deliver full year operating profit(1)
in line with expectations(2)

·      Fourth share buyback programme for up to £50 million launched on
31 August 2023

·   Market leading brands, geographic diversity and exceptionally strong
balance sheet leaves Grafton well positioned to perform

 

Trading and Performance

 

Grafton continued to deliver a resilient performance in this latest trading
period despite slightly softer than anticipated market conditions in September
and October.  Group revenue in the ten months to 31 October 2023 was up by
1.7 per cent to £1.96 billion (2022: £1.93 billion).  The Group remains on
track to deliver full year operating profit in line with expectations
supported by cost reduction measures implemented earlier this year and ongoing
cost discipline.

 

Overall Group demand was more subdued in the four months to the end of October
leading to a marginal decline in year-on-year average daily like-for-like
revenue with modest price deflation experienced in the Distribution businesses
in Ireland and the UK.  This outcome compared to slight growth in average
daily like-for-like revenue reported for the first half. Grafton continued to
benefit from the breadth of its customer relationships in multiple end-markets
and geographic spread of operations with 60 per cent of revenue generated from
operations outside the UK in Ireland, the Netherlands and Finland.

 

In Ireland, Chadwicks saw a resumption of growth in average daily
like-for-like revenue in the four months to the end of October against the
backdrop of firmer demand in the residential repair, maintenance and
improvement ("RMI") and new build markets.  The Competition and Consumer
Protection Commission approved the acquisition of Rooney's single branch
building materials distribution business and this deal completed at the end of
October.

 

The trading environment in the UK RMI market remained challenging for Selco as
discretionary spending on the home continued to be under pressure from high
inflation and higher interest rates.  In the Netherlands, revenue growth with
key account customers engaged on large commercial construction projects more
than offset lower sales to smaller customers and timber factories. In Finland,
the slowdown in economic and construction activity reduced demand in IKH.

 

In Retailing, revenue increased in recent months in Woodie's DIY, Home and
Garden business in Ireland following weaker demand for seasonal products at
the start of the second half. In Manufacturing, CPI Mortars experienced a
decline in volumes as housebuilders reduced housing starts in response to
lower reservation rates for new homes.  Revenue was also lower in StairBox,
the bespoke staircase manufacturing business that supplies the RMI market,
following a prolonged period of uninterrupted growth.

 

 

 

 

Segmental Trading

 

The table below shows the changes in average daily like-for-like revenue and
in total revenue compared to the same periods in the prior year.

 

 Segment                 Average Daily Like-for-Like Revenue Growth                       Total Revenue Growth

                          in Constant Currency
                         Constant                                    Sterling

                         Currency
                         Six Months       Four Months to 31 October  Ten Months           Ten Months           Ten Months

                         to 30 June       2023                       to 31 October 2023   to 31 October 2023   to 31 October 2023

                         2023
 Merchanting
      - Ireland          (3.4%)           0.8%                       (1.7%)               (0.1%)               2.3%
      - UK               (2.3%)           (3.2%)                     (2.8%)               (1.8%)               (1.8%)
      - Netherlands      3.7              1.7%                       2.9%                 3.8%                 6.4%
      - Finland          (0.8%)           (7.6%)                     (3.8%)               (1.6%)               0.7%
 Retailing               6.3%             0.8%                       4.2%                 4.2%                 6.7%
 Manufacturing           10.9%            (8.2%)                     1.9%                 2.8%                 3.0%
 Group                   0.1%             (1.5%)                     (0.8%)               0.3%                 1.7%

 

Share Buyback

 

A fourth programme was launched on 31 August 2023 to buy back ordinary shares
in the Company for an aggregate consideration of up to £50 million,
reflecting continuing confidence in the Group's trading prospects, strong
balance sheet and cash generative operations.  The Group had undertaken
£36.65 million of the buyback programme by the close of business on 10
November 2023.

 

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

 

"Despite more challenging markets in recent months, we expect Group operating
profit for the year to be in line with expectations. Our strong focus on cost
management mitigated some of the impacts of weaker trading and we continue to
support our customers with excellent value propositions across our portfolio
of businesses.

 

"Our strong balance sheet and cash generative operations provide us with the
resources to develop our businesses organically and to take advantage of
acquisition opportunities as they arise. We continue to be actively engaged
with potential vendors to build a deeper pool of opportunities in our targeted
European markets."

 

 

 

(1) Operating profit is defined as profit before amortisation of intangible
assets arising on acquisitions,

acquisition related items, exceptional items, net finance expense and income
tax charge.

 

(2) Grafton compiled consensus Analysts' forecasts for 2023 show operating
profit(1) of circa £198.1 million and a range of £190.5 million to £205.0
million.

 

Ends

 

For further information please contact:

 Investors                                   Media

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

                                             Pat Walsh       +353 (0) 87 226 9345

 Eric Born          Chief Executive Officer
 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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