REG - Grafton Group PLC - Trading Update

GraftonAnnouncement

11/01/2024 07:00

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RNS Number : 3788Z  Grafton Group PLC  11 January 2024

Grafton Group plc

Trading Update

Full Year Operating Profit to Slightly Exceed Top End of Analysts' Forecasts

 

Grafton Group plc ("Grafton" or "the Group"), the international building
materials distributor and DIY retailer, issues this trading update for the
period from 1 November 2023 to 31 December 2023.

 

Highlights

 

·      Resilient performance in subdued markets

·      Adjusted operating profit(1) to be slightly ahead of top end of
Analysts' forecasts(2)

·      Fourth share buyback programme increased in December from £50
million to £100 million

·      Group ended year in strong financial position

 

Trading and Performance

 

Grafton delivered a resilient performance in this latest trading period
despite a continuation of the softer market conditions experienced in
September and October.  Group revenue for the year was up by 0.8 per cent to
£2.32 billion (2022: £2.30 billion).  The geographic spread of our
operations and exposure to multiple end-markets are core strengths with 60 per
cent of Group revenue for the year generated outside the UK from operations in
Ireland, the Netherlands and Finland.

 

Full year adjusted operating profit(1) is expected to be slightly ahead of the
top end of Analysts' forecasts(2) supported by stronger trading by our
businesses in Ireland alongside the timely implementation of previously
announced cost reduction measures and ongoing Group-wide cost discipline.

 

Overall activity in the Group's businesses remained subdued in November and
December with average daily like-for-like revenue down by 2.9 per cent which
was slightly less than the outturn for September and October.  The decline
was partly driven by modest product price deflation experienced in the
distribution businesses in Ireland and the UK.

 

In Ireland, Chadwicks performed well in the run up to the year end and
continued to benefit from an improving trend in daily like-for-like revenue.
Demand was firmer in the residential repair, maintenance and improvement
("RMI") and new build markets and in segments served by Chadwicks specialist
brands.  Our UK markets remained weak and RMI volumes continued to be under
pressure due to lower discretionary spending by households on their homes, the
decline in housing transactions and a fall-off in larger home improvement
projects.

 

In the Netherlands, the rate of materials price inflation eased considerably
in the period.  Lower revenue from smaller customers and timber factories was
mainly offset by growth from customers engaged on large commercial
construction projects. In our Finnish business, the slowdown in economic and
construction activity continued to weigh on volumes in IKH.

 

In Retailing, the Woodie's DIY, Home and Garden business in Ireland delivered
a strong performance in the final months of the year.  In Manufacturing, CPI
Mortars experienced a sharp decline in volumes as its house building customer
base reduced output in response to lower demand from buyers.  Volumes were
also lower in the StairBox staircase manufacturing business that supplies the
RMI market.

 

 

Segmental Trading

 

The table below shows the year-on-year changes in average daily like-for-like
revenue and in total revenue.

 

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

                          in Constant Currency
                         Constant                                        Sterling

                         Currency
                         Ten Months           Two Months to 31 December  Year to            Year to            Year to

                         to 31 October 2023   2023                       31 December 2023   31 December 2023   31 December 2023
 Merchanting
      - Ireland          (1.7%)               1.5%                       (1.2%)             0.1%               2.1%
      - UK               (2.8%)               (5.2%)                     (3.2%)             (2.4%)             (2.4%)
      - Netherlands      2.9%                 (0.2%)                     2.3%               2.3%               4.4%
      - Finland          (3.8%)               (13.0%)                    (5.6%)             (4.2%)             (2.4%)
 Retailing               4.2%                 2.4%                       3.8%               3.9%               5.8%
 Manufacturing           1.9%                 (16.2%)                    (0.8%)             (0.1%)             0.0%
 Group                   (0.8%)               (2.9%)                     (1.1%)             (0.4%)             0.8%

 

Share Buybacks

 

As previously announced, the fourth share buyback programme launched on 31
August 2023 was extended to 31 May 2024 and the maximum aggregate
consideration increased from £50 million to £100 million.  The Group had
completed £47.5 million of the buyback programme by 31 December 2023.

 

A total of £290.8 million was returned to shareholders through share buybacks
between 9 May 2022 and 31 December 2023 reflecting confidence in the Group's
trading prospects and its strong balance sheet and cash generative operations
while also retaining significant capacity to invest in strategic growth
opportunities.

 

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

 

"While the trading environment in the final months of the year continued to be
subdued across most of our markets, we are pleased that adjusted operating
profit for 2023 is now expected to be slightly ahead of the top end of
analysts' forecasts.   We made good progress during the year developing and
executing our strategy and in starting to build a deeper pool of acquisition
opportunities in targeted European markets. We remain confident in the
medium-term drivers of demand in our markets and, underpinned by a strong
balance sheet, Grafton is well positioned for growth as trading conditions
improve."

 

 

 

(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 £197.3 million and a range of £194.0 million to £201.0
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

                                             Toto Berger    +44 (0) 7880 680 403

 

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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