MKM Building Supplies has announced its full year results for the period ended 30 September 2023, showing a 13% increase in revenue but a slight decrease in profit.
According to its financial report, M.K.M Building Supplies Limited (MKM) delivered a further strong set of financial results in 2023, outpacing the market and growing the top line. This, it says, represents a considerable achievement, given softer market conditions in 2023 and on the back of a particularly strong year in 2022.
Revenue increased by 13% to£927 million (2022: £818 million) in the year to September 2023, and have now doubled over the last three years. On a like-for-like basis, revenue was broadly in-line, reflecting the outperformance of the company despite softer market conditions.
The increase in revenue reflects new branch openings and acquisitions. During the year, MKM added 18 branches, with a further four added post the year end, bringing the current total to 125. These additions consist of 13 new branch opening and five acquired through one acquisition. The Company has now added 48 branches to its network since September 2020, turning the business from a regional to a national operator, with a presence throughout the UK.
However, profits are down to £88.5 million from £91 million in 2022 (-2,74%). According to MKM, this reflects strong revenue growth from new branches and solid underlying revenue from established branches, offset by an increase in the cost base, as expected, due to the relatively greater number of recent branch openings. A typical branch profile is for costs to be higher during development, with payback and profit contribution once more established.
Key to the change in the cost base in 2023 is the relative number of new branches, as detailed above. In-line with the wider business environment, the company also saw some increase in relative staff, transport costs, and higher rent and rates. The increase in transport costs was on the back of higher fuel pricing earlier in the 2023.
The significant supply chain inflation experienced in 2022 remained broadly flat in 2023, with the falling cost of some products, such as timber, being offset by increased pricing across other products, such as building materials; particularly those associated with high energy input.
The level of bad debts across the business remained within the normal range. This is despite the more challenging market conditions.
During the year, MKM continued to invest in its staff, so they are best placed to deliver for customers, staff retention is high and that people across the business remain motivated and interested in delivering to the best of their ability. This investment included the doubling of the training hours per employee to ensure good levels of product understanding, improved efficiency and best practice, and a strong culture of health and safety. The company aims to pay staff at competitive rates, in addition to operating an incentive scheme, accessible to all 3,000 staff. Furthermore, it continued initiatives to improve on its gender balance KPIs, supporting diversity and wider decision making across the business.
The company sought to continue to reduce its carbon emissions, through several ongoing initiatives, in 2023. These include increasing the number of e-forklift trucks, which during the period grew from 22% to 32% of the fleet, and increasing the proportion of hybrid and electric vehicles it uses, which in 2023 grew from 55% to 69%. Alongside these initiatives, it also trebled the number of sustainability related products it sells.
In-line with its commitment to local communities, MKM continued to work with local organisations and charities and during the year and supported these groups by raising in excess of £500,000.
MKM feels it remains in a good position and is expecting further growth in the business in 2024, with an ambition to open an additional 10 branches during the year.
That investment is based on meeting the long-term need for building products, with positive underlying market drivers, as the UK continues to seek to deliver housing supply in-line with demand. It is also based on the Company’s greater exposure to the repairs, maintenance and investment market, which has remained relatively buoyant, when compared to the new build market.
In the near-term, the company anticipate market demand to remain subdued, but as interest rates are expected to decline later in the year, it anticipates seeing demand pick up, as smaller house builders and construction contractors are better able to recycle cashflows into new projects.
Kate Tinsley, CEO of MKM Building Supplies, commented: “2023 was another solid year for the business. We saw MKM continue to outperform, against what was a more challenging market than recent prior years. This performance was driven by our strategic focus on new branch openings, investing in existing branches, ensuring product availability, a motivated team and our continued commitment to local communities and service.
“While we have grown into a national business, we have always kept to our roots, which is to work with local Branch Directors, meeting local needs and customer service at the individual branch level. We do this by incentivising local management and staff and by giving each branch significant autonomy. The result is that we have stronger relationships with our customer base, ensuring their repeat business and, through reputation, grow our market share.”
