Grafton Group has issued a trading update for the four months following the first lockdown.
The update states that trading in the four months to 31 October 2020 was ahead of expectations with Group like-for-like revenue increading by 6.3% and total revenue by 5.1% to £1.0 billion (2019: £962.0 million).
This positive result is ascrived to a strong recovery in the period following the significant disruption to trading in the second quarter caused by the pandemic. Demand was strongest in the Woodie’s DIY, Home and Garden business in Ireland and in the residential repair, maintenance and improvement (“RMI”) segment of the distribution markets in the UK, Ireland and the Netherlands.
The business says it particularly benefited from an accelerated rollout of its digital strategy as well as pent-up demand that developed during the lockdown and, in management’s view, from households investing part of the savings from reduced spending on travel, leisure and hospitality in their homes. The increase in the number of people working from home due to the pandemic also contributed to higher demand in our stores and branches.
However, despite those good results, revenue for the ten months to 31 October 2020 declined by 9.0% to £2.07 billion (ten months to 31 October 2019: £2.28 billion). Group like-for-like revenue was down by 11.4% in the ten months due to the impact of the pandemic on trading in the second quarter. This was only partly offset by a marked improvement in trading in the four months to the end of October.
The UK distribution business continued to recover following the reopening of branches on a full-service basis by the end of June. Selco, in particular, performed strongly, with average daily like-for-like growth of 10.8% over the four months.
Average daily like-for-like revenue was marginally down however in the traditional UK merchanting business as growth in residential RMI revenue was offset by softer housebuilding and commercial markets.
Recovery in the UK mortar manufacturing business over the last four months was comparatively slow and volumes remain below those of last year, as housebuilders focused initially on completing houses that were already under construction, following the reopening of sites, before starting new developments on a phased basis.
In conclusion updates states that the Group expect to an adjusted operating profit in the second half in the range of £130 - £140 million. This would represent results between 24% and 33% higher than the second half of 2019.
Gavin Slark, Chief Executive Officer, commented: “I am very grateful for the way that colleagues across the Group have continued to respond to the ongoing pandemic and thank them sincerely for their dedication, commitment and hard work which has enabled our businesses to continue to trade and to support our customers in a safe environment.
“Despite all the current uncertainties, we are very encouraged by the trading and financial performance of the Group over recent months. Grafton is in a very strong financial position and has a diversified portfolio of market leading businesses with exposure to residential RMI leaving it well placed to benefit from current market trends.”
