MKM Building Supplies has announced its full year results for the period ended 30 September 2023.
Highlights from the report include a 13% increase in annual revenues to £927m (2022: £818m), driven by an additional 18 branches added to its network over the period (13 new branch openings, with a further five added through acquisition). A further four branches have opened since September, taking the overall total to 125, whilst overall revenues are said to have “doubled over the last three years.”
Whilst profits of £88.5m show a slight fall (2022: £91m), the business attributes this in part to the “expected” increase in costs that accompanied “the relatively greater number of recent branch openings” and asserts that it has outperformed the market by maintaining a “high customer service rating” and the “breadth of product availability and range”.
Furthermore, it contends that “good progress” has been made on its sustainability initiatives including reducing emissions via the adoption of e-forklift trucks and a greater share of BEV in addition to trebling the number of sustainable products for sale.
CEO Kate Tinsley said: “2023 was another solid year for the business. We saw MKM continue to outperform, against what was a more challenging market than recent prior years. This performance was driven by our strategic focus on new branch openings, investing in existing branches, ensuring product availability, a motivated team and our continued commitment to local communities and service.
“While we have grown into a national business, we have always kept to our roots, which is to work with local Branch Directors, meeting local needs and customer service at the individual branch level. We do this by incentivising local management and staff and by giving each branch significant autonomy. The result is that we have stronger relationships with our customer base, ensuring their repeat business and, through reputation, grow our market share.”
Further detail from the MKM report:
Financials:
Having experienced significant supply chain inflation in 2022, this remained broadly flat in 2023, with the falling cost of some products, such as timber, being offset by increased pricing across other products, such as building materials, particularly those associated with high energy input.
The level of bad debts across the business remained within the normal range. This is despite the more challenging market conditions. This position reflects the strength of the Company’s relationship with its customers and the value of decentralised management.
Sustainability:
Sustainability remains at the forefront of the Company’s decision making at a national and local level. MKM has established schemes in place, in which it continues to invest in and is independently measured against. The Company is pleased that these efforts were recognised during the year, with it being accredited ecovadis Bronze status.
The Company sought to continue to reduce the emissions rate, though several ongoing initiatives, in 2023. These include increasing the number of e-forklift trucks, which during the period grew from 22% to 32% of the fleet, and increasing the proportion of hybrid and electric vehicles used by the Company, which in 2023 grew from 55% to 69%. Alongside these initiatives, the Company also trebled the number of sustainability related products it sells.
MKM also continued to invest in its staff, with a doubling of the training hours per employee during the year. Furthermore, it continued initiatives to improve on its gender balance KPIs, supporting diversity and wider decision making across the business.
In-line with its commitment to local communities, MKM continued to work with local organisations and charities and during the year and was pleased to have supported these groups in raising in excess of £0.5m.
Outlook:
MKM remains well placed and is therefore looking forward to further growth in the business in 2024, with an ambition to open an additional 10 branches during the year.
That investment is based on meeting the long-term need for building products, with positive underlying market drivers, as the UK continues to seek to deliver housing supply in-line with demand. It is also based on the Company’s greater exposure to the repairs, maintenance and investment market, which has remained relatively buoyant, when compared to the new build market.
In the near-term, we anticipate market demand to remain subdued, but as interest rates are expected to decline later in the year, we anticipate seeing demand pick up, as smaller house builders and construction contractors are better able to recycle cashflows into new projects.
