Trading update for the year ended 31 December 2024 reveals strong Q4 performance from merchanting.
Lords, a leading distributor of building materials in the UK, has issued a trading update for the year ended 31 December 2024 ('FY24' or the 'period') .
The standout figure is that FY24 Group revenue is expected to be £436 million (FY23: £463 million)
The Merchanting division performed ahead of expectations, particularly in the final quarter of FY24 with LFL revenue 11% ahead of Q4 FY23. In particular, AW Lumb performed strongly in the second half and delivered a 5% full year increase in revenue on FY23 and specialist roofing business, Advanced Roofing was 10% ahead. Revenue for the division for the year, subject to audit, is expected to be in line with last year at £214 million.
The Plumbing and Heating division, which is typically seasonally strong in the winter months, experienced a challenging final quarter of the year, in contrast to FY23 which saw accelerated activity ahead of the introduction of the CHMM on 1 January 2024.
Lords continues to demonstrate its resilience and has held its market position in challenging market conditions, which have persisted across the sector since FY22.
The Board continues to focus on what is within its control, managing costs, driving efficiencies, reducing debt and pragmatically supporting strategic initiatives to drive organic and acquisitive growth. The Board believes this has positioned Lords strongly for the anticipated recovery in the construction market.
Like all UK businesses, the Group faces increased costs in 2025 in relation to Employer’s National Insurance, business rates and minimum wage increases, which for Lords amount to c. £1 million. There are signs of an improving construction market which should support an improvement in the Repair, Maintenance and Improvement (‘RMI’) sector, but this is not generally expected before the second half of 2025.
In addition to its organic growth levers, the Group’s M&A strategy is focused on specialist, independent businesses that can broaden the Group’s product range and/or geographic reach in highly fragmented markets. There remains significant opportunity for consolidation given Lords' reputation as being an acquirer of choice in the market.
Shanker Patel, Chief Executive Officer of Lords, said: "In a challenging year across our end markets, the fundamentals of our business in customer service excellence, highly engaged colleagues and specialist brands have underpinned a resilient performance in 2024. We are particularly pleased to see Merchanting’s strong relative performance in the final quarter.
“We continue to tightly control costs and to optimise working capital. Net debt was reduced by £4.1 million in the second half. As market conditions begin to improve, we are confident that the Group is exceptionally well positioned for operational leverage to improve profitability, with ongoing organic and acquisitive growth."
