Grafton Group has celebrated its geographic diversity in its latest financial report, with over half its revenue derived in Ireland, the Netherlands and Finland, in the period 1 July 2022 to 31 October 2022.
The favourable first half revenue trends in the Distribution businesses in Ireland and the Netherlands continued against the backdrop of solid underlying demand and building materials price inflation. Trading conditions continued to be softer in the UK distribution business as households reduced discretionary spending on home improvements, said the Group. Revenue in the Finnish distribution business was ahead of a strong prior year comparator. Trading normalised in line with the prior year in the DIY, Home and Garden business in Ireland.
Group revenue from continuing operations, which excludes the traditional merchanting business in Great Britain divested at the end of last year, increased by 9.5% to £1.93 billion in the ten months to 31 October 2022 from £1.76 billion in the prior year and by 39.2% from £1.39 billion in the same period in 2019.
Eric Born is to succeed Gavin Slark as Group CEO on 28 November 2022. Slark said:
"Grafton delivered a solid performance in the period demonstrating the benefit of its balanced spread of operations across geographic markets and sectors. Notwithstanding macro-economic challenges particularly in the UK, the Group is confident that it will deliver its expectations for the year. Grafton is in a very strong financial position enabling the Group to increase returns to shareholders through a new share buyback programme announced today, which is our second buyback programme of 2022, whilst also retaining the financial flexibility to fund suitable acquisition opportunities."
“UK sales price inflation moderates”
Selco Builders Warehouse average daily like-for-like revenue declined by 6.1% and building materials sales price inflation moderated from the high double-digit level experienced in the first half.
Households reduced discretionary and non-essential spending on their homes in response to the significant decline in real disposable incomes, interest rate increases and a fall in consumer confidence.
The MacBlair distribution business in Northern Ireland traded at close to last year's record level with increased revenue from house building offsetting an anticipated decline in housing RMI. The TG Lynes commercial pipe and fittings distributor in London performed strongly benefitting from good demand in the public sector, house building and apartment construction segments of its market. Leyland SDM, the specialist decorators' merchant in London, continued to benefit from a post pandemic recovery in activity in the city.
Chadwicks' distribution business in Ireland operated at high activity levels in a market that continued to experience significant price inflation. House building held up well despite the sharp increase in construction costs which has reduced affordability and put volumes under pressure in the one-off housing and apartment markets. There was good demand in the residential RMI market although the availability of skilled labour was a limiting factor on growth.
The positive first half revenue trends in the Netherlands continued at a similar pace in the period driven by price inflation. Volumes were broadly flat as good growth across key account customers engaged in commercial construction and the maintenance of public sector housing offset lower volumes supplied to smaller customers operating in the housing RMI market.
Average daily like-for-like revenue in IKH was ahead of the prior year aided by broadly resilient activity in end markets, demand from construction projects carried into this year and the recovery of materials price inflation.
Revenue in the Woodie's DIY, Home and Garden business in Ireland continued to normalise in the period following the exceptional pandemic related gains made in the prior year. Demand was robust in the gardening and homewares categories as Woodie's maintained its strong market leadership position supported by a differentiated customer experience.