Covering the period from 1 January 2021 to 18 April 2021 in advance of its AGM, Grafton Group plc’s latest update reveals a “strong trading” performance with revenue growth “ahead of expectations” in March and April.
Full Group revenue in the period to 18 April 2021 was £846.8 million, an increase of 32.9% on the same period last year which was impacted by the closure of branches, stores and manufacturing plants with effect from 24 March 2020 in the UK and from 28 March 2020 in Ireland, except for essential services.
Perhaps more tellingly, Group revenue was up by 8.3% compared to the same period in 2019.
Across the Group’s operations, Woodie’s in Ireland and Selco in the UK were revealed to have made the strongest gains, continuing the trend from the second half of last year. The update also noted: “Strong demand and supply side constraints contributed to longer lead times, an increase in product price inflation and shortages of a number of key categories of building materials in the UK and Ireland.”
The table below shows the changes in average daily like-for-like revenue and in total revenue for continuing operations compared to the same period in 2020 and 2019:
| Segment |
Average Daily Like-for-Like Constant Currency Revenue Growth
|
Total Revenue |
||
|
Sterling |
Sterling |
|||
|
Period from 1 January to 18 April |
Period from 1 January to 18 April |
|||
|
2021 vs 2020 |
2021 vs 2019 |
2021 vs 2020 |
2021 vs 2019 |
|
| Merchanting | ||||
| – UK |
41.3% |
7.5% |
35.2% |
(0.5%) |
| – Ireland |
12.0% |
(2.0%) |
13.0% |
(5.5%) |
| – Netherlands |
4.1% |
1.1% |
3.9% |
70.5% |
| Retailing |
112.5% |
69.7% |
111.5% |
69.6% |
| Manufacturing |
17.2% |
(14.0%) |
57.4% |
11.3% |
| Group |
35.1% |
9.0% |
32.9% |
8.3% |
Increase in Operating Profit Guidance
The Group states that it now expects “adjusted operating profit for the current financial year will be circa 15-20% ahead of consensus forecasts of £206 million for 2021 as a result of the stronger than anticipated growth in revenue in March and April, an improved first half outlook for the overall Group as we move into the seasonally important trading months of May and June and higher property profit”.
It adds: “At this relatively early stage of the year, we take a cautious view of the second half financial performance which is likely to be influenced by the pace of normalisation of consumer spending patterns.”
Focusing on Grafton’s domestic merchanting operations, which it terms ‘UK Distribution‘, and Selco was revealed to have continued to perform strongly with average daily like-for-like revenue up 66.0% on the same period last year, which was impacted by the closure of the branch estate for a period, and by 18.5% compared to the same period in 2019 reflecting the strong momentum in March and April.
Investment in Selco continued with the recent opening of a new branch in Liverpool which increased the branch footprint to 70.
Trading in the traditional merchanting business in Great Britain was “softer in January and February due to the lockdown in the wider economy but then benefitted from a solid recovery in residential RMI and new build activity in March and April”. Average daily like-for-like revenue in this business was ahead of the same period in 2019 by 3.1%.
Further detail on the Group’s results for ‘Ireland Distribution’, ‘Netherlands Distribution’, ‘Retailing’ and ‘Manufacturing’ can be seen here.
Chief Executive Officer Gavin Slark said: “Over a year has now passed since the first lockdown and I wish to again acknowledge the exceptional commitment of colleagues across the Group and to thank them for enabling our businesses to trade in a safe environment.
“We have made a very positive start to the year and are encouraged by the improving trends and momentum in trading in the period which we expect to continue through the remainder of the half year. Despite some ongoing uncertainty related to the pandemic, Grafton is well placed for continued progress in the current year supported by our market leading businesses and strong financial position.”
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