In providing a trading update for the year ended 31 December 2022 ahead of publication of its FY22 Final Results in April, Lords Group Trading plc reports “a year of positive strategic progress underpinned by strong financial performance.”
Lords is indicating FY22 revenues of £450million, resulting in 23.9% total growth for the full year (FY21: £363million), with Merchanting revenue growth of 69.2% in FY22 said to reflect its “increased market share and value-added acquisitions during the period and the continued and substantial market share opportunity available to the Group.”
Based on this strong performance, the Group expects to report record revenues ahead of current market expectations and the Board remains confident in Lords’ ability to fulfil its objective to be a £500 million revenue business by 2024 and to achieve a 7.5% Adjusted EBITDA margin over the medium term.
Segmental Trading
The table below shows total revenue growth and like-for-like for H1-22 and FY22:
| Unaudited FY22 Revenue | Like-for-Like Revenue Growth | Change in Total Revenue | |||
| Division | H1-22 vs. H1-21 | FY22 vs. FY21 | H1-22 vs. H1-21 | FY22 vs. FY21 | |
| Merchanting | £221m | 14.5% | 17.4% | 73.4% | 69.2% |
| Plumbing & Heating | £229m | (12.5)% | (9.1)% | (8.2)% | (1.6)% |
| Group | £450m | (3.3)% | 0.2% | 19.7% | 23.9% |
Merchanting
The Group says its regional brands continue to take market share by offering customers an expanding product range and entry into new markets. Accordingly, it reports the strategy execution translated into Merchanting revenue growth of 69.2% and like-for-like revenue growth of 17.4%.
The Merchanting acquisitions completed by the Group during FY22, being Advance Roofing (January 2022), AW Lumb (March 2022) and Buildbase Sudbury (April 2022) have been successfully integrated and are performing ahead of management expectations. Together these acquisitions delivered the Merchanting division earnings accretion, product range extension or entry into new geographies.
Plumbing and Heating
The Plumbing and Heating division has demonstrated resilient performance during FY22, with total P&H revenue growth of (1.6)%, (growth of (9.1)% on a like-for-like basis), despite the industry-wide boiler component shortages (which have continued to ease throughout H2-22).
The combined acquisition of HRP Trade and Direct Heating (April 2022) was “earnings accretive and has been successfully integrated and is trading in line with management expectations.” Moreover, the enlarged P&H business is “realising customer and product range synergies across all P&H brands as a result of the acquisition.”
In addition, the Group’s new store roll out strategy for Mr Central Heating, the Group’s brand which supplies installers and homeowners through online and instore channels (and “thus providing an attractive EBITDA margin profile”) continues with a tenth store opened in West Bromwich in H2-22. This marked the first of an intended 40 new Mr Central Heating stores over the next five years.
Current Trading and Outlook
The update noted: “Whilst mindful of the uncertain macro-economic environment and its impact on the sector in the short term, the continued delivery of the Lords organic and acquisitive led growth strategy gives the Board confidence in Lords’ ability to fulfil its IPO objective to be a £500 million revenue business by 2024 and an EBITDA margin of 7.5% in the medium term.”
Shanker Patel, Chief Executive Officer of Lords, said: “I am proud of the progress Lords has made during 2022, continuing to deliver against our strategic plan whilst delivering record financial performance during the period. Our teams did a magnificent job serving customers and the quality of our people remains integral to the success of our customer focused proposition.
“We enter 2023 in a strong financial position that will enable us to continue to invest in our three P’s (People, Plant, Premises) to pursue organic and acquisitive led growth opportunities. While market conditions in 2023 may become more challenging in the short term, the Group has substantial organic growth levers through new geographies and product range extension that provide our Group with the opportunity to continue its track record of growth.”
