Grafton Group Sees Profits Decline Amid Challenging Market Conditions

• Robust performance reflects diversified business benefits in mixed market conditions

Grafton Group plc ("Grafton" or "the Group"), the international building materials distributor and DIY retailer is pleased to announce its half year results for the period ended 30 June 2024. 

Financial Highlights

• First half adjusted operating profit of £83.1million (H1 2023: £105.1million) reflective of weaker market conditions outside the Group's home market in Ireland.
  
  
• Strong cashflow generated from operations of £161.1 million (H1 2023: £191.3 million).
  
  
• £104.8 million (H1 2023: £132.7 million) returned to shareholders in dividend payments and share buybacks in the first half.
  
  
• On the strength of anticipated free cashflow generation in the current financial year and confidence in the Group's prospects a new share buyback programme for up to £30m will commence today, complementing dividend growth of 5.0%.
  
  
• Strong balance sheet preserved for organic and inorganic development opportunities.
  
  
• Adjusted return on capital employed of 11.1%.
  
  
• Continue to anticipate delivering full year adjusted operating profit in line with analysts' expectations[1] recognising important Autumn trading season to come.

Operational Highlights

• Overall Group gross margin broadly unchanged and overheads continued to be tightly controlled.
  
  
• Good performance in our Irish businesses, Chadwicks and Woodie's, where outlook for growth remains positive.
  
  
• Product price deflation had a negative impact overall on sales in the Irish and UK Distribution businesses, however, its adverse effect is moderating.
  
  
• Volumes lower across the UK, Netherlands and Finland but continued focus on being the providers of choice for our customers and driving operational efficiencies to position for market improvement.
  
  
• Resilient performance by our UK Manufacturing businesses despite backdrop of challenging UK housing market volume declines. 

Eric Born, Chief Executive Officer Commented:   

"This has been a robust first half performance despite challenging conditions in several of our markets. We are pleased with the performance and outlook of our Irish businesses in particular, and we continue to drive efficiencies and innovations in our other markets to capitalise on what we see as significant positive operating leverage opportunities as these markets turn.

"Whilst uncertainties remain in the short term, our medium-term outlook remains positive, supported by strong demand fundamentals, not least in the demand for new housing as markets normalise and consumer confidence improves.  At this point in the year, with the important Autumn trading season yet to come, we continue to anticipate delivering adjusted operating profit for 2024 in line with analysts' expectations.

"The Group has continued to be highly cash generative through a challenging period in the cycle, which has enabled us to return cash to shareholders whilst preserving a strong balance sheet to invest in organic and inorganic development opportunities. We continue to actively pursue opportunities to strengthen our existing market positions as well as platform acquisitions, and we remain optimistic that we can execute on some of these opportunities in the near term."

Source : Grafton Group plc

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