Woodies DIY parent Grafton Group is on track to deliver full year operating profit in line with expectations after it reported revenue growth of 1.7 per cent in the 10 months to the end of October in a trading update on Tuesday.
The Dublin-based company, which owns the Woodie’s retailing and Chadwicks merchant brands in the Republic, also operates across the UK, Netherlands and Finland, where it has more specialist distribution businesses.
The group said it continued to deliver a resilient performance in the period from July 1st to October 31st despite “slightly softer than anticipated” market conditions in September and October.
Group revenue in the ten months to October 31st was up by 1.7 per cent to £1.96 billion from £1.93 billion in the corresponding period last year.
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“The group remains on track to deliver full year operating profit in line with expectations supported by cost reduction measures implemented earlier this year and ongoing cost discipline,” it told investors.
Overall group demand was more subdued in the four months to the end of October leading to a marginal decline in year-on-year average daily like-for-like revenue with modest price deflation experienced in the distribution businesses in Ireland and Britain.
This outcome compared to slight growth in average daily like-for-like revenue reported for the first half.
Grafton continued to benefit from the breadth of its customer relationships in multiple end-markets and geographic spread of operations with 60 per cent of revenue generated from operations outside the UK in Ireland, the Netherlands, and Finland.
In retail, revenue increased in recent months in Woodie’s DIY’s home and garden business in Ireland following weaker demand for seasonal products at the start of the second half.
Also in Ireland, Chadwicks saw a resumption of growth in average daily like-for-like revenue in the four months to the end of October against the backdrop of firmer demand in the residential repair, maintenance and improvement market, as well as the new build market.
The trading environment in the UK residential repair, maintenance and improvement market “remained challenging” for Selco as discretionary spending on the home continued to be under pressure from high inflation and higher interest rates.
In the Netherlands, revenue growth with key account customers engaged on large commercial construction projects more than offset lower sales to smaller customers and timber factories. In Finland, the slowdown in economic and construction activity reduced demand in IKH.
In manufacturing, CPI Mortars experienced a decline in volumes as housebuilders reduced housing starts in response to lower reservation rates for new homes. Revenue was also lower in StairBox following a prolonged period of uninterrupted growth.
A fourth share buyback programme was launched by Grafton Group on August 31st for an aggregate consideration of up to £50 million. The group had undertaken £36.65 million of the buyback programme by the close of business on Friday.
Grafton Group chief executive Eric Born said the group has focused on cutting costs in recent months.
“Our strong focus on cost management mitigated some of the impacts of weaker trading and we continue to support our customers with excellent value propositions across our portfolio of businesses,” he said.
“Our strong balance sheet and cash generative operations provide us with the resources to develop our businesses organically and to take advantage of acquisition opportunities as they arise.
“We continue to be actively engaged with potential vendors to build a deeper pool of opportunities in our targeted European markets.”
Grafton saw its pretax profit fall by 27 per cent to £104.3 million in the first six months of the year as home improvements and maintenance was hit by cost-of-living pressures across the markets in which it operates.
