TIDMGFTU
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 GBP50 million to GBP100 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 GBP2.32 billion (2022: GBP2.30 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 Total Revenue Growth
Revenue Growth
in Constant Currency
Constant Sterling
Currency
Ten Months Two Months Year to Year to Year to
to 31 to 31 December 31 December 31 December 31 December
October 2023 2023 2023 2023
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 GBP50 million to
GBP100 million. The Group had completed GBP47.5 million of the
buyback programme by 31 December 2023.
A total of GBP290.8 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 GBP197.3 million and a range of
GBP194.0 million to GBP201.0 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
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
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END
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