TIDMGFTU
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 GBP50 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 GBP1.96
billion (2022: GBP1.93 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 Total Revenue Growth
Revenue Growth
in Constant Currency
Constant Sterling
Currency
Six Months Four Months Ten Months Ten Months Ten Months
to 30 to 31 October to 31 October to 31 October to 31 October
June 2023 2023 2023 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 GBP50 million, reflecting continuing confidence in the Group's
trading prospects, strong balance sheet and cash generative
operations. The Group had undertaken GBP36.65 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 GBP198.1 million and a range of
GBP190.5 million to GBP205.0 million.
Ends
For further information please contact:
Investors Media
Grafton +353 1 216 Murrays +353 1 498 0300
Group plc 0600 Pat Walsh +353 (0) 87 226 9345
Eric Born Chief Executive
Officer
David Arnold Chief Financial Buchanan GraftonGroup@buchanancomms.co.uk
Officer 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
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END
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