The impact of the coronavirus crisis can be seen in the release of Grafton Group plc’s full year results for the year ended 31 December 2020.
For the Group as a whole, revenue in continuing operations is down 6% to £2.5 billion, reflecting the impact of first half branch closures in response to the pandemic. Operating profit in continuing operations is also down 6% to £193.3 million and 4% before property profit, yet this is said to exceed management expectations outlined in January trading update.
Furthermore, the strong recovery in profitability in second half of the year saw adjusted operating profit go up 47%, reflecting the robust residential repair, maintenance and improvement markets in the UK and Ireland. Looking specifically at the Group’s UK merchant operations, Selco was noted to have a “particularly strong second half recovery” whilst the improved performance of Buildbase was “aided by increased margin and cost control”.
In addition, the Group has “Accelerated (its) digital investment programme by an agile deployment of platforms that have improved functionality for customers and we recruited colleagues with data analytics skills” and has also “improved the quality of our customer proposition with investment in the branch estate, our logistics capabilities and colleague training”.
Gavin Slark, Chief Executive Officer of Grafton Group plc, commented: “Grafton today is a stronger, more resilient, more digitally and sustainability savvy business than it was before the outset of the Covid-19 pandemic. That evolution reflects not just the commitment and hard work of our colleagues and the agility and resolve of our businesses in a challenging year, but also our multi-year transformation and investment journey principally targeting the more resilient construction sectors of repair, maintenance and improvement, underpinned by an improved customer proposition across all of our businesses.
“We are very encouraged by the Group’s strong performance through the second half of last year and while we remain cautious about first half revenue trends in our markets in light of Covid uncertainty, we expect to make further progress in the current year and are confident that our 11,000 colleagues will continue to deliver for our customers. We finished last year in an excellent financial position that provides a strong platform for the future growth and development of our Group.”
Writing in the introduction to the report, Gavin outlined the impact of the initial wave of coronavirus restriction, stating: “Inevitably the trading performance of the Group suffered in the first half, reflected in reported adjusted operating profit that was 61% lower than the prior year at £39.4m”.
However, indicative of the Group’s strategic focus to “invest into higher returning businesses where we have or can achieve good market positions and provide a differentiated offering to our customers” and “principally targeting the more resilient construction sectors of repair, maintenance and improvement”, when trading resumed after the first wave of the pandemic Gavin revealed that “we were able to benefit from strong underlying market growth in the second half that helped to drive a recovery in trading across our businesses and to report adjusted operating profit for the year of £193.3m, only 6% lower than 2019”.
Focusing specifically on the Grafton Group’s UK merchanting businesses (referred to as ‘UK Distribution’ in the report), the year end results showed revenue of £1,460.7m which was a 14.6% decrease from 2019 revenue of £1,710.8m (figures exclude Plumbase which was disposed of in 2019).