In advance of the announcement of its Final Results for the year on 25 February 2021, Grafton Group plc has issued the following trading update for the year ended 31 December 2020.
Since issuing its Q3 update in November, Grafton reports that its Trading Performance in the two months to 31 December 2020 was ahead of expectations with Group average daily like-for-like revenue up by 7.2% and total revenue ahead by 10.8% to £439.4 million (2019: £396.7 million).
This, it says, marked a continuation, through to the year end, of the strong recovery evident in the four months to the end of October which followed a sharp decline in second quarter revenue caused by the pandemic.
Demand was reported as being strongest in the Woodie’s and Chadwicks businesses in Ireland, and in Selco in the UK with the Group benefitting from its strategy of “investing in higher returning businesses and from households spending a greater proportion of disposable income on their homes.”
Overall, “Group revenue for the year from continuing operations declined by 6.1% to £2.51 billion (2019: £2.67 billion) reflecting a sharp decline in trading during the second quarter lockdown that was significantly offset by a strong recovery in the second half of the year.”
The table shows the changes in average daily like-for-like revenue and in total revenue for continuing operations compared to the same periods in 2019
| Segment | Average Daily Like-for-Like
Revenue Growth in Constant Currency |
Total Revenue | ||
| Constant
Currency |
Actual
(Sterling) |
|||
| Two Months to 31 December
2020 |
Year to
31 December 2020 |
Year to
31 December 2020 |
Year to
31 December 2020 |
|
| Merchanting | ||||
| – UK | 5.1% | (14.2%) | (14.6%) | (14.6%) |
| – Ireland | 10.3% | (2.9%) | (1.7%) | (0.2%) |
| – Netherlands | (1.1%) | 0.7% | 28.8% | 30.6% |
| Retailing | 26.5% | 17.2% | 17.5% | 20.0% |
| Manufacturing | (10.5%) | (25.0%) | (22.8%) | (22.7%) |
| Group | 7.2% | (8.7%) | (6.6%) | (6.1%) |
Increase in Operating Profit Guidance
The update states that the Group now expects that “adjusted operating profit for the financial year ended 31 December 2020 will be slightly more than 5% ahead of current consensus (of analyst’s forecasts) of £174 million as a result of the stronger than expected performance in November and December, though the outturn will be lower than 2019 due to the significant impact of Covid-19 in the first half.”
UK Distribution
Focusing on the Group’s UK merchanting operations, Selco continued to perform strongly with growth in average daily like-for-like revenue accelerating to 18.1% in the final two months of the year from 10.8% in the four months to the end of October. Average daily like-for-like revenue in the traditional UK merchanting business continued to trend “marginally behind” the prior year as “higher activity in the private housing RMI market was offset by lower spend in the new housing and non-residential construction markets.”
Gavin Slark, Chief Executive Officer of Grafton Group plc, said: “I greatly appreciate the way that colleagues across the Group have responded to the pandemic and thank them most sincerely for their exceptional commitment, hard work and support that enables our businesses to trade in a safe environment.
“We are very encouraged by the strong recovery and performance of the Group in the second half of the year. Despite the uncertainties related to the pandemic, we believe Grafton is well placed for continuing progress in the year ahead supported by our very strong financial and market positions.”
