A challenging year in the market is reflected in Grafton Group plc’s 2024 Annual Report.
Overall Group Revenue in 2024 decreased by 1.6% to £2.28 billion (2023: £2.32bn) but “remained flat in constant currency.” With a full year adjusted operating profit of £177.5 million (2023: £205.5 million), Grafton states that trading was “slightly ahead of analysts’ expectations with a higher reported property profit.” Operational Highlights, meanwhile, included a “strong performance in Ireland while the rate of decline continues to ease in the UK.”
Looking specifically at Grafton Group plc’s UK Distribution segment (comprising Selco, MacBlair, Leyland and TG Lynes), average daily like-for-like revenue was down 5.9% in the year due to “continued weak demand in the RMI market together with the effects of price deflation.” The rate of decline of average daily like-for-like revenue “moderated from 7.7% in the first half to 3.9% in the second half, in part driven by easier comparatives.”
Price deflation was said to have “continued to moderate over the course of the year.” Total revenue of £780.8m was 4.6% lower than 2023 (£818.1m) with “prior year acquisitions in Northern Ireland and new branches opened in Selco and Leyland SDM contributing revenue of £4.8 million in the year.”
In the report, Chief Executive Officer Eric Born said: “Our UK Distribution business saw a continuing decline in profitability as RMI demand and consumer confidence remained at historically low levels. Relative to easier comparators in the second half of last year, the decline in volumes continued to moderate approaching year end, whilst the negative effects of product price deflation also reduced as the year progressed.
“Conversely, pass-through of inflationary cost pressure on overheads, particularly labour and property related costs, was difficult in what remains a competitive, value-focused market at this point in the cycle.”
Eric continued: “In the UK, we remain cautious on the near term outlook for a recovery in RMI demand as consumer confidence remains weak due to economic uncertainty and forecasts for growth weaken. The recovery in housebuilding in the UK is expected to be slow with any meaningful acceleration of output expected to be very gradual and reliant on supply-side improvements from the Government.
“Grafton demonstrated the strength of its portfolio of businesses with a high rate of conversion of profit into cash in 2024. This has been achieved while the Group continued to upgrade and improve its branch network, open new locations and invest in IT infrastructure to enhance customers’ experience.”
He added: “The Group ends the year in a strong financial position, with a healthy balance sheet, and remains well positioned to continue to invest in organic and inorganic opportunities to support future growth and development. Whilst uncertainties remain in the short term, we are confident that Grafton is exceptionally well positioned to benefit as conditions improve.”
Grafton Group plc has also announced its intention to introduce a further new share buyback programme to “buy back ordinary shares for a maximum aggregate consideration of up to £30 million and to make trading decisions under the programme independently of the Company in accordance with certain pre-set parameters.”
Click here for more on the final results or to download the full Grafton Group plc 2024 Annual Report and Accounts.
