International building materials distributor and DIY retailer Grafton Group has issued its trading update from 1 January to 20 October 2024.
Group revenue in the period was £1.82 billion, down 3.7% from the previous year and 2.3% lower in constant currency. The company said a weaker euro in the current financial year slightly reduced the reported results compared to the same period last year.
UK distribution
The average daily like-for-like revenue was down by 4.4% in the four-month from 1 July 2024 to 20 October 2024 as repair, maintenance and improvement (RMI) demand remained weak, together with some “ongoing but moderating” effects of price deflation. Price deflation in Selco eased from circa 4% in the first half to circa 1.7% in the third quarter as timber prices stabilised.
Consumer confidence remained relatively weak, and the usual seasonal pick-up of activity in September did not materialise as expected.
Ireland distribution
In Ireland, Chadwicks continued to deliver a positive trading performance in the four-month period , with overall average daily like-for-like revenue increasing by 1.4%.
Materials price deflation continued to moderate and was estimated at circa 2.2% in the period compared to circa 4.9% in the first half, as timber and steel pricing continued to stabilise.
Looking ahead, the outlook for growth in construction remains positive in Ireland, supported by strong government investment to increase the housing supply. While residential commencement notices for the 12 months to September 2024 increased to a record 61,500, housing completions in the first nine months of 2024 were lower compared to the same period last year.
Manufacturing
The average daily like-for-like revenue was 13.4% lower in the four-month period, showing a moderation in the rate of decline in comparison to the first half against easier comparators. Both CPI Mortars and Stairbox continued to experience lower volumes compared to the prior year on the back of lower housebuilding volumes and a weaker RMI market respectively in the UK.
Outlook
Looking ahead, Eric Born, chief executive officer of Grafton Group, said: “Whilst the recovery in certain markets, particularly the UK and Finland, remains slow, we are confident that our medium-term outlook remains positive, supported by strong demand fundamentals, not headwinds from our euro denominated businesses, we anticipate delivering adjusted operating profit for 2024 broadly in line with analysts’ expectations.”
Acquisition of Salvador Escoda
Aside from the business update, Grafton Group has acquired Spanish distributor Salvador Escoda. The total consideration payable is a maximum of €132 million on a cash and debt free basis. Grafton Group said the acquisition was consistent with its strategy of acquiring platform businesses with strong and unique propositions offering exciting growth opportunities and which operate in fragmented markets with strong underlying fundamentals.
