Grafton Group, the international distributor of building materials, has announced its resilience in the face of economic pressures with a slight revenue increase in the first ten months of 2023. Despite challenging market conditions in the UK and Ireland, the company is set to meet its full-year operating profit expectations.
The group, which operates prominent brands such as Woodie's DIY and Chadwicks in Ireland, reported a 1.7% rise in revenue to £1.96 billion by October, compared to £1.93 billion in the same period last year. This modest growth comes amidst a backdrop of modest price deflation and softer demand in some of its key markets.
In Ireland, both Chadwicks and Woodie's have experienced growth in average daily revenue over the past four months. This uptick is attributed to stronger demand in residential repair, maintenance, improvement, and new build markets. Conversely, the UK's Selco Builders Warehouse has been navigating through tougher trading conditions spurred by high inflation and rising interest rates.
Grafton's presence outside of the UK and Ireland is significant, with 60% of its revenue stemming from operations in other regions such as the Netherlands and Finland. The company noted growth in the Netherlands driven by large commercial construction projects, which helped offset weaker sales elsewhere. Finland's IKH, however, witnessed reduced demand due to an economic slowdown.
To further bolster investor confidence, Grafton initiated its fourth share buyback program on August 31st, committing £50 million (GBP1 = USD1.2283) to the effort. By Friday's close, £36.65 million had already been repurchased.
CEO Eric Born highlighted the importance of cost management strategies that have helped mitigate the impact of weaker trading conditions. He also pointed out Grafton's strong balance sheet and cash-generating capabilities that support both organic growth and potential acquisitions.
Despite facing cost-of-living pressures that have dampened demand for home improvement and maintenance, Grafton reported a pretax profit drop of 27% to £104.3 million in the first half of the year. However, with steady revenue growth and disciplined cost management, Grafton Group remains confident in its ability to navigate through current economic challenges while maintaining profitability.
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