TIDMGFTU
RNS Number : 0439F
Grafton Group PLC
12 November 2020
Grafton Group plc
Trading Update
Strong Trading Performance and Increase in Operating Profit
Guidance
Grafton Group plc, the building materials distributor and DIY
retailer with operations in the UK, Ireland and the Netherlands, is
today providing a trading update for the four months to 31 October
2020.
Highlights
-- Revenue and profitability in the four months to 31 October 2020 ahead of expectations
-- Adjusted operating profit(1) guidance for second half
increased to GBP130 - GBP140 million range
-- Net cash position before lease liabilities increased to
GBP150.0 million at 31 October 2020 (30 June 2020: GBP58.6
million)
Health and Safety
Health and safety is our number one priority and we remain very
focused on the safety of our colleagues and customers. Our
branches, stores and manufacturing locations operate to the highest
health and safety standards and remain open in all geographies in
line with the Covid-19 guidance provided locally by Governments and
health authorities.
Trading Performance
Trading in the four months to 31 October 2020 was ahead of
expectations. Group like-for-like revenue was up by 6.3 per cent
and total revenue was up by 5.1 per cent to GBP1.0 billion (2019:
GBP962.0 million).
There was a strong recovery in the period following the
significant disruption to trading in the second quarter caused by
the pandemic. Demand was strongest in the Woodie's DIY, Home and
Garden business in Ireland and in the residential repair,
maintenance and improvement ("RMI") segment of the distribution
markets in the UK, Ireland and the Netherlands. The Group leveraged
its well established trading positions in these markets and
benefited from investments made in recent years in its higher
margin businesses, including the accelerated rollout of its digital
strategy.
The Group also benefitted from pent-up demand that developed
during the lockdown and, in management's view, from households
investing part of the savings from reduced spending on travel,
leisure and hospitality in their homes. The increase in the number
of people working from home due to the pandemic also contributed to
higher demand in our stores and branches.
The table below shows changes in average daily like-for-like
revenue and in total revenue for continuing operations for the four
months to 31 October 2020 compared to the same period in 2019.
Segment Average Daily Total Revenue
Like-for-Like
Revenue
in Constant
Currency
Constant Sterling
Currency
Four Months Four Months Four Months
to 31 October to 31 October to 31 October
2020 2020 2020
Distribution
- UK 2.3% 0.0% 0.0%
- Ireland 11.0% 10.8% 12.2%
- Netherlands 2.9% 2.9% 4.4%
Retailing 41.4% 41.4% 42.9%
Manufacturing (11.0%) (12.1%) (12.0%)
--------------- --------------- ---------------
Group 6.3% 4.7% 5.1%
--------------- --------------- ---------------
Group revenue for the ten months to 31 October 2020 in
continuing operations declined by 9.0 per cent to GBP2.07 billion
(ten months to 31 October 2019: GBP2.28 billion) and by 9.3 per
cent in constant currency. Group like-for-like revenue was down by
11.4 per cent in the ten months due to the impact of the pandemic
on trading in the second quarter that was partly offset by a marked
improvement in trading in the four months to the end of
October.
UK Distribution
The UK distribution business continued to recover following the
reopening of branches on a full-service basis by the end of June.
The overall business returned to growth with average daily
like-for-like revenue up 2.3 per cent in the four months to the end
of October.
Selco performed strongly with average daily like-for-like growth
of 10.8 per cent over the four months. The Selco trade-only,
self-select, fixed price model that operates from large,
well-stocked branches was well placed to benefit from pent-up
demand following the easing of restrictions and increased spending
by households on RMI projects.
Average daily like-for-like revenue was marginally down in the
traditional UK merchanting business as growth in residential RMI
revenue was offset by softer housebuilding and commercial
markets.
Irish Distribution
The Chadwicks branch network increased average daily
like-for-like revenue by 11.0 per cent over the four months
supported by very strong demand in the residential RMI market in
Ireland and a recovery in house completions. This was partly offset
by lower volumes in the commercial construction and civils segments
of the market.
Netherlands Distribution
The Group achieved steady growth in average daily like-for-like
revenue in the Netherlands business, including the Polvo
acquisition that completed on 1 July 2019, reflecting good demand
from core customers operating in the domestic RMI market and from
national key account customers engaged in house building,
commercial construction and renovation projects.
Retailing
The Woodie's DIY, Home and Garden business in Ireland
experienced exceptional growth in the period driven by very high
demand for home maintenance and improvement products.
Manufacturing
Volumes continued to slowly recover in the UK mortar
manufacturing business over the last four months but, as
anticipated, remained below the prior year as housebuilders focused
initially on completing houses that were already under construction
following the reopening of sites before gradually starting new
developments on a phased basis.
Operating Profit Guidance
The Group is on course to deliver a strong performance for the
second half following a higher than expected level of operating
profit for the four months to the end of October.
The mix of revenue had a positive impact on gross margin in the
period. Retailing and RMI activity generally commands higher gross
margins than revenue focused on housebuilding and commercial
construction and the higher relative growth rate in these segments
contributed to an improvement in the Group's gross margin over the
four months. The result for the period also benefitted from tight
control of operating costs.
We anticipate delivering adjusted operating profit(1) in the
second half in the range of GBP130 - GBP140 million on the basis
that trends in trading to the end of the year remain consistent
with those experienced in October and are not materially affected
by the recently introduced Covid-19 restrictions. This is
approximately 24 to 33 per cent higher than the second half of 2019
and is significantly ahead of guidance given in August that
adjusted operating profit in the second half would be at a similar
level to the same period in 2019.
Cash Flow and Liquidity
The Group's net cash position before (IFRS 16) lease liabilities
increased to GBP150.0 million at 31 October 2020, up from GBP58.6
million at 30 June 2020 June reflecting the strong cash flow from
operations in the period.
The Group had liquidity of GBP783.2 million at 31 October 2020
of which GBP423.2 million was held in accessible cash and GBP360.0
million in undrawn revolving bank facilities.
Gavin Slark, Chief Executive Officer of Grafton Group plc
commented today:
" I am very grateful for the way that colleagues across the
Group have continued to respond to the ongoing pandemic and thank
them sincerely for their dedication, commitment and hard work which
has enabled our businesses to continue to trade and to support our
customers in a safe environment. Despite all the current
uncertainties, we are very encouraged by the trading and financial
performance of the Group over recent months. Grafton is in a very
strong financial position and has a diversified portfolio of market
leading businesses with exposure to residential RMI leaving it well
placed to benefit from current market trends."
(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.
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
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 merchanting markets in the UK, Ireland and the
Netherlands. Grafton is also the market leader in the DIY retailing
market in Ireland and is the largest manufacturer of dry mortar in
the UK.
Grafton trades from circa 550 branches and has circa 11,000
colleagues. Its portfolio of brands includes Selco, Buildbase,
Leyland SDM, MacBlair and CPI EuroMix in the UK; Chadwicks and
Woodie's in Ireland and Isero and Polvo in the Netherlands.
For furth er information visit www.graftonplc.com
, the news service of the London Stock Exchange. RNS is approved by
the Financial Conduct Authority to act as a Primary Information
Provider in the United Kingdom. Terms and conditions relating to
the use and distribution of this information may apply. For further
information, please contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
TSTUAUBRROUAAAA
(END) Dow Jones Newswires
November 12, 2020 02:00 ET (07:00 GMT)
Grafton Grp.uts (LSE:GFTU)
Historical Stock Chart
From Jun 2024 to Jul 2024
Grafton Grp.uts (LSE:GFTU)
Historical Stock Chart
From Jul 2023 to Jul 2024