TIDMGFTU
RNS Number : 7175R
Grafton Group PLC
09 November 2021
Grafton Group plc
Trading Update
Strong Trading and
Increased Full Year Operating Profit Guidance
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 2021 to 31 October
2021.
Trading Performance
The positive revenue trends experienced in the first half were
sustained in the period, supported by good underlying demand in the
Group's markets and further normalisation of trading conditions as
Covid-19 restrictions were lifted. The strength of the Group's
brands and trading formats together with generally favorable
conditions in its markets contributed to an encouraging outcome for
the period despite supply chain pressures and heightened price
inflation for building materials that was the key driver of revenue
growth in the distribution businesses in the UK and Ireland.
Group total revenue from continuing operations, which excludes
the traditional merchanting business in Great Britain that is being
divested, increased by 28.3 per cent to GBP1.76 billion in the ten
months to 31 October 2021 from GBP1.37 billion in the same period
in 2020 and by 27.1 per cent from GBP1.39 billion in the same
period in 2019.
Increase in Operating Profit Guidance
Trading in the period was stronger than anticipated and we now
expect that full year Group adjusted operating profit(1) in
continuing operations will be in the range of GBP265 million to
GBP270 million. This compares to current consensus(2) Analysts'
forecasts of GBP256 million.
Segment Trading - Continuing Operations
The table below shows the changes in average daily like-for-like
revenue for the four months to the end of October and in total
revenue for the ten months in continuing operations compared to the
same periods in 2020 and 2019.
Segment Average Daily Like-for-Like Total Revenue
Constant Currency
Revenue Growth
Sterling Sterling
--------- ---------
Period - 1 July Period - 1 January
to 31 October to 31 October
----------------------------- --------------------
2021 vs 2021 vs 2021 vs 2021 vs
2020 2019 2020 2019
-------------- ------------- --------- ---------
Distribution
-------------- ------------- --------- ---------
- UK (Continuing
Operations) 7.0% 16.6% 35.4% 19.8%
-------------- ------------- --------- ---------
- Ireland 8.7% 20.2% 19.6% 14.9%
-------------- ------------- --------- ---------
- Netherlands 3.6% 7.4% 3.8% 41.2%
-------------- ------------- --------- ---------
Retailing (13.9%) 21.7% 21.3% 41.6%
-------------- ------------- --------- ---------
Manufacturing 5.7% (6.2%) 67.5% 21.8%
-------------- ------------- --------- ---------
Group (Continuing
Operations) 4.1% 15.7% 28.3% 27.1%
-------------- ------------- --------- ---------
UK Distribution
Selco performed strongly with average daily like-for-like growth
of 7.1 per cent in the four months to October 2021 measured against
a demanding growth rate of 10.8 per cent in the same period last
year. The Selco trade-only, self-select, fixed price model was well
placed to support increased spending by its customers on
residential RMI projects. We recently opened our 71(st) Selco
branch in Canning Town following the successful opening of a branch
in Liverpool earlier this year.
Ireland Distribution
We saw strong trading momentum in Chadwicks following the phased
reopening of the sector in mid-April and this trend continued in
the period supported by an improved economic backdrop and buoyant
levels of activity in the residential RMI and new build
markets.
Netherlands Distribution
The positive volume and revenue growth trends that developed in
the first half in the specialist ironmongery, tools and fixings
distribution business in the Netherlands, that remained open in
2020, continued in the period. The return to a steady growth path
was sustained by increased spending across all customer segments on
renovation projects, house building and commercial
construction.
Finland Distribution
IKH, the recently acquired leading workwear, personal protective
equipment, tools and spare parts wholesaler in Finland, is
integrating well under Grafton ownership and we are very pleased
with the way the management team have responded to becoming part of
a larger Group.
Retailing
The exceptional revenue growth trends in the Woodie's DIY, Home
and Garden business in Ireland moderated as anticipated, following
the reopening in May of non-essential retail and leisure
activities, while continuing to achieve a step change in
performance compared to 2019, supported by a strong performance in
seasonal categories.
Manufacturing
The improving trend in mortar volumes in the first half
continued, supported by good demand fundamentals in the house
building market. StairBox, the staircase manufacturing business
acquired in late 2020, traded strongly and materially outperformed
pre-acquisition expectations as it approaches the end of its first
year under Grafton ownership.
Discontinued Operations
The disposal of the traditional merchanting business in Great
Britain has been notified by the purchaser to the Competition and
Markets Authority and its review is ongoing at this time.
International Financial Reporting Standards require this business
to be treated as discontinued operations and as a deemed disposal
at 30 June 2021.
Outlook
2021 has been an exceptional year for Grafton as the strength of
DIY activity and an inflationary surge in building materials prices
had a very positive impact on volumes, revenue and gross margins.
However, supply chain disruption and pricing pressure remain a
challenging backdrop for many of our suppliers and customers. We
expect to exit 2021 in good shape and well placed to outperform in
our markets.
Gavin Slark, Chief Executive Officer of Grafton Group plc
commented today:
"I would like to again thank colleagues across our Group for
their untiring commitment to safely supporting high levels of
activity in our branches, stores and manufacturing operations.
The overall Group delivered a good performance in the period,
against strong comparatives, leading to an increase in current year
operating profit guidance supported by the strength of our market
positions, geographic diversity and strong financial position."
(1) Adjusted operating profit is defined as profit before
amortisation of intangible assets arising on acquisitions,
exceptional items, net finance expense and income tax charge.
(2) Grafton compiled consensus Analysts' forecasts for 2021 show
adjusted operating profit(1) in continuing operations of GBP256
million.
Ends
For further information please contact:
Grafton Group plc +353 1 216 0600
Gavin Slark Chief Executive Officer
David Arnold Chief Financial Officer
Murray +353 1 498 0300/ +353 87 2269345
Pat Walsh
MHP Communications +44 20 3128 8100
Tim Rowntree/Rachel Mann
About Grafton
Grafton Group plc is an international distributor of building
materials to trade customers and has leading regional or national
positions in the building markets in the UK, Ireland, the
Netherlands and Finland following the acquisition of IKH on 1 July
2021 which also trades in Scandinavia and the Baltics. Grafton is
also the market leader in the DIY retailing market in Ireland and
is the largest manufacturer of dry mortar in the UK where it also
operates a leading staircase manufacturing business.
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END
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