Business

Resilient trading at the end of 2023 boosts Grafton operating profit

Irish businesses buoy company as UK market sees tougher conditions

Woodie’s DIY’s continued to show growth in 2023. Photograph: Laura Hutton

Ciara O'Brien
Thu Jan 11 2024 - 08:08

Building materials group Grafton said it full-year operating profit would be slightly ahead of analysts’ forecasts, supported by strong trading in its Irish businesses and cost management, as it put in a resilient performance in the latter months of the year.

The group on Thursday issued a trading update for the last two months of 2023, saying it had ended the year in a strong financial position despite softer trading in September and October. Revenue was up 0.8 per cent to £2.32 billion (€2.7 billion), with more than 60 per cent generated from its operations outside the UK in Ireland, the Netherlands and Finland.

But activity overall was subdued in November and December with average daily like-for-like revenue falling almost 3 per cent as the distribution businesses in Ireland and the UK saw prices prices fall modestly.

The group said its Irish business, Chadwicks, performed well in the run up to the end of the year, with demand firmer in the residential repair, maintenance and improvement and new build markets. The Woodie’s DIY business in Ireland showed a strong performance in the final months of 2023, with Grafton’s overall retailing business showing growth of 5.8 per cent year on year.

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Markets in the UK remained weaker though, with volumes under pressure as discretionary spending by households on their homes declined, and larger home improvement projects also fell.

The Netherlands saw materials price inflation ease, but lower revenue from smaller customers and timber factories was largely offset by large commercial construction projects.

The manufacturing sector was flat, with CPI Mortars volumes declining on lower demand from house building, and volumes also fell in its StairBox staircase manufacturing business, which supplies the maintenance and home improvement market.

“While the trading environment in the final months of the year continued to be subdued across most of our markets, we are pleased that adjusted operating profit for 2023 is now expected to be slightly ahead of the top end of analysts’ forecasts,” said chief executive Eric Born. “We made good progress during the year developing and executing our strategy and in starting to build a deeper pool of acquisition opportunities in targeted European markets. We remain confident in the medium-term drivers of demand in our markets and, underpinned by a strong balance sheet, Grafton is well positioned for growth as trading conditions improve.”

The group said a total of £290.8 million was returned to shareholders through share buybacks between May 2022 and the end of December 2023. It has extended the fourth share buyback, which was launched at the end of AUgust last year, until May 31st, with a top end target of £100 million. As of the end of last year, Grafton said it had completed £47.5 million of that programme.

Ciara O'Brien

Ciara O'Brien

Ciara O'Brien is an Irish Times business and technology journalist

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