Grafton revenues fall amid market weakness
reported a 5% decrease in year-to-date revenue in an update on Thursday, to £669.2m for the period from 1 January to 21 April, with a 3.3% decline in constant currency.
The FTSE 250 company put the softer trading performance down to prevailing macroeconomic conditions across its markets, and adverse weather conditions in Ireland and the UK impacting demand.
Average daily like-for-like revenue saw a 4.5% decrease compared to the prior year.
In Ireland, Chadwicks experienced a material price deflation of about 6%, while benefiting from volume improvements and a favourable macroeconomic environment driven by the housing sector.
Demand in the UK's repair, maintenance, and improvement (RMI) market remained weak, with a material price deflation of around 3.5%, compounded by adverse weather conditions.
In the Netherlands, lower revenue from small customers and timber factories was balanced by growth in revenue from large construction projects.
Meanwhile, the Finnish economy's slowdown continued to affect volumes in IKH.
Woodie's DIY, Home, and Garden business in Ireland saw a positive start to the year, with revenue growth attributed to increased transaction numbers and average basket sizes.
Conversely, UK manufacturing faced challenges, particularly CPI Mortars, which experienced a significant decline in volumes aligned with reduced house building activity.
StairBox also saw lower volumes due to decreased demand for bespoke staircases in a weaker residential RMI market.
In terms of shareholder returns, Grafton Group completed its fourth share buyback programme, initially launched on 31 August 2023 and extended until 31 May 2024, with a maximum total consideration of £100m.
The programme ended on 30 April, involving the repurchase of 11.1 million shares at an average price of £9.02 per share.
In total, £343.3m was returned to shareholders through share buybacks completed between 9 May 2022 and 30 April this year, representing the repurchase of 40.27 million shares at an average price of £8.53 apiece, equivalent to 16.8% of shares in issue at the start of the first buyback programme.
"Trading in the period continued to be challenging in most of our markets and revenue trends were also impacted by price deflation and exceptionally wet weather in Ireland and the UK," said chief executive officer Eric Born.
"Looking ahead, whilst we are not expecting a sustained recovery in our markets in the short term, we do expect profitability to be slightly more weighted than usual to the second half."
Born said the firm remained focused on "being the providers of choice" for its customers, investing in its brands and maintaining tight control of costs.
"We are confident in the underlying demand fundamentals and the medium-term outlook for our markets and on the opportunities provided by our cash generative business and a healthy balance sheet."
At 0907 BST, shares in Grafton Group were down 0.15% at 32.7p.
Reporting by Josh White for Sharecast.com.
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