Grafton Group boasts of "resilient performance in subdued markets"

Grafton Group has issued a trading update for the period from 1 November 2023 to 31 December 2023.

According to the company, Grafton delivered a resilient performance in this latest trading period despite a continuation of the softer market conditions experienced in September and October. As a result, group revenue for the year was up by 0.8% to £2.32 billion (2022: £2.30 billion).

The geographic spread of its operations and exposure to multiple end-markets are core strengths with 60% of the group's revenue for the year being generated outside the UK, from operations in Ireland, the Netherlands and Finland.

Full year adjusted operating profit is expected to be slightly ahead of the top end of Analysts’ forecasts supported by stronger trading by the group's 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%, 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.

However, 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. Average daily like-for-like revenue was in fact down 3.2% by year end.

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.

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.”