Woodie's DIY and Chadwicks owner Grafton Group has reported lower profits and slightly higher revenues for 2023 amid challenging market conditions.
The builders materials and DIY group said its revenues for the 12 months to the end of December inched 0.8% higher to £2.319 billion from £2.301 billion in 2022.
But its adjusted operating profit fell by 28% to £205.5m from £285.9m, which it said was above the top end of analysts' forecasts.
Grafton's board is recommending a final dividend for 2023 of 26 pence, up from 23.75 pence in 2022. An interim dividend of 10.0 pence per share was paid in October, which brought the total dividend for the year to 36 pence per share, an increase of 9.1% on dividends of 33 pence paid for 2022.
The company noted that its results were supported by relatively stronger trading in Ireland and the Netherlands compared to the UK and Finland, adding that its Woodie's DIY, Home and Garden retail business performed well during the year.
Grafton said that cost-of-living pressures driven by high inflation and interest rate rises led to reduced spending by households on home improvements and weakened demand for new homes as affordability became stretched.
Volumes in the distribution businesses were therefore lower in these weaker markets, but building materials price inflation gradually declined before turning to deflation in the closing months of the year, the company added.
Grafton said that is building materials distribution business Chadwicks responded well to evolving market conditions and managed to contend with significant steel and timber price deflation, competitive pricing pressure in flat markets and operating cost inflation.
It noted that profitability declined in the first half and the business operated in line with the prior year in the second half.
Its Selco business in the UK saw the rate of decline in volumes moderated from 6% in the first half to 2.3% in the second half. Selco is almost entirely exposed to the UK residential RMI market, a segment of the construction sector that has been hardest hit in the current cyclical downturn that started in the first quarter of 2022.
Grafton said that its MacBlair business, based in Northern Ireland, encountered weak trading conditions in a competitive market that reduced revenue and profitability. Market coverage was extended with the acquisition of branches in Portglenone, Co Antrim and Strabane, Co Tyrone.
Eric Born, Grafton's chief executive, said that despite challenging market conditions, Grafton has succeeded in delivering full year adjusted operating profit above the top end of analysts' forecasts.
"This is testament to our resilient market leading positions, responsive management teams and portfolio of high-returning businesses," the CEO added.
Looking ahead, the Grafton CEO said the company expects to continue to benefit from the spread of the group’s operations across four geographies and exposure to a broad range of end-markets.
"While trading conditions are expected to remain challenging, demand fundamentals are supported by a structural under supply of new homes and an aging housing stock that requires upgrading including energy conservation measures," Eric Born said.
"With a somewhat improving economic backdrop, we are confident that Grafton is exceptionally well positioned to benefit as the cycle turns, markets normalise and consumer confidence improves," he added.
