International building materials distributor and DIY retailer, Grafton Group plc, has issued a trading update for the first half of 2022 ahead of half year results to be released in August.
Overall Group trading was good in the half year with total revenue up by 13.9%. Average daily like-for-like revenue growth of 3.4% was complemented by a significant contribution from acquisitions in Finland, the UK, Ireland and the Netherlands.
Group revenue increased by 12.1% to £1.15 billion in the half year from £1.03 billion in first half of 2021, excluding the traditional merchanting business in Great Britain that was divested on 31 December 2021.
Despite increased economic uncertainty, the company doesn’t see any need to adjust full year expectations at this stage.
UK Distribution
In Selco, revenue trends in quarter one and quarter two of this year developed against the backdrop of Covid-19 restrictions in the first quarter of 2021 and a surge in activity in the second quarter of 2021 leading to record demand for building materials as households increased spending on the home. In the first half of the current financial year, the UK trading environment saw significant double digit product price inflation for building materials. In response, Selco focused on maintaining a strong offering for its customers and operational excellence. A new branch was opened in Exeter in April and a new branch in Cheltenham is scheduled to open before the year end which will take the estate to 74.
The MacBlair distribution business in Northern Ireland performed well with an increase in house building offsetting reduced spending on outdoor projects compared with last year's record levels.
Netherlands Distribution
The positive first quarter revenue growth trends in the Isero and Polvo specialist ironmongery, tools and fixings distribution business in the Netherlands continued at a similar pace in the second quarter. Improved demand was driven by key account customers engaged on large construction projects, growth in value added solutions and increased spending by housing corporations on social housing RMI.
Organic revenue growth was complemented by a significant contribution from acquisitions that increased total revenue for the half year by 17.8%. The five branch Regts business in Friesland that was acquired in January 2022 performed strongly and growth in the North East region was further enhanced by the four branch Govers business acquired in April 2021.
Succession
A process to appoint a new Group Chief Executive Officer has commenced with the support of an executive search firm. Gavin Slark will continue in his roles as CEO and Board Director until 31 December 2022.
"The Group's overall trading performance was good against a very strong comparator in the first half of last year and our operating profit expectations for the full year are unchanged. Notwithstanding current macro-economic risks, our portfolio of resilient high performing businesses has the flexibility to adapt to changing circumstances and is well positioned to outperform," said Gavin Slark, Chief Executive Officer of Grafton Group plc. "Grafton is in a very strong financial position and, with a pipeline of acquisition opportunities, the Group is well positioned to make continued progress on the delivery of its strategy."
