Grafton Group plc has revealed its Final Results for the Year Ended 31 December 2019.
The 2019 figures for Grafton Group plc show a 3% increase in revenue to £2.7 billion in its continuing operations (following the disposal of Plumbase and its Belgian Merchanting business last year), with a 4% increase in Group operating profit to £194.3m.
It cited “strong organic growth” in its Irish Merchanting and Retailing businesses along with “significant growth in profitability” in its Netherlands business, however this has “helped offset” a more difficult performance in the UK due to political and economic uncertainty in what the report describes as “the most challenging year for the merchanting market since the global financial crisis”. Accordingly, operating profit in continuing UK merchant operations was marginally down on the prior year.
CEO Gavin Slark commented: “The outlook for 2020 is of continuing but moderating growth in Ireland and the Netherlands and while reduced uncertainty may lead to some uplift in the UK RMI market, we remain cautious about the speed of any recovery. Given the strength of our brands we look forward to another year of progress for Grafton and with a strong balance sheet and rigorous financial discipline we are well placed to capitalise on growth opportunities.”
Focusing specifically on the Grafton Group’s UK merchant operations, the report presents the following:
“Volumes in the UK merchanting business were affected by weakening demand as the year progressed. Households deferred discretionary spending on home improvement projects due to a decline in sentiment and increased uncertainty about the outlook for the economy and housing market.
“The overall UK merchanting business reported a small increase in average daily like-for-like revenue. The Selco business was resilient but it was impacted by the weaker trading conditions. Lower average daily like-for-like revenue and pressure on gross margins in a very competitive market contributed to a decline in profitability in Buildbase.”
“We expect the UK housing market to benefit from reduced uncertainty, healthy labour market conditions and low interest rates. We remain cautious however at this stage about the speed of any recovery in the RMI market which may take time to gain traction.”
The merchanting businesses in the UK, Ireland and the Netherlands contributed 89% of Group revenue (2018: 90%). Overall average daily like-for-like revenue was up by 1.5% with relatively small growth in the UK and Netherlands merchanting markets and good growth in Ireland.
For UK Merchanting specifically, revenue was £1.7108 billion for 2019 compared to £1.7295 billion in 2018 (both figures exclude Plumbase).