Grafton Group Plc · LSE:GFTU
Grafton — FY2023 Earnings Presentation
37 slides from Grafton's earnings presentation, March 2024
Slide 1: Grafton Group plc Final Results
Grafton Group plc Final Results Financial Year Ended 31 December 2023
Slide 2: Cautionary statement & notes
2 Cautionary statement & notes Cautionary statement Certain statements made in this presentation are forward-looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual events or results to differ materially fro
Slide 3: Meet the team
3 Meet the team Eric Born David Arnold Chief Executive Chief Financial Officer Officer Grafton Group plc | Final Results
Slide 4: Grafton Group plc | Final Results
4 Grafton Group plc | Final Results
Slide 5: 2023 Operational Highlights
5 2023 Operational Highlights Solid trading performance in challenging market conditions Resilient Distribution performance despite lower volumes Solid trading in DIY Retail with Woodies as Irish consumer confidence recovered Higher operating profit in Manufacturing despite volume decline Strengthen
Slide 6: 2023 Financial Highlights
6 2023 Financial Highlights Full year adjusted operating profit £205.5m, better than top end of analyst expectations Adjusted operating margin before property profit 8.8% Adjusted ROCE 11.9% Dividend per share increased by 9.1% £228.3m returned to shareholders via dividend and share buybacks Strong
Slide 7: Financial review
7 Financial review David Arnold - CFO 02
Slide 8: Income statement
8 Income statement £m 2023 2022 Change Revenue 2,319.2 2,301.5 +0.8% Adjusted operating profit pre property profit 204.2 260.5 (21.6%) Property profit 1.3 25.4 Adjusted operating profit 205.5 285.9 (28.1%) Amortisation1 and acquisition related items (22.4) (21.6) Statutory operating profit 183.1 264
Slide 9: Earnings Per Share
9 Earnings Per Share £m 2023 2022 Change Adjusted operating profit 205.5 285.9 (28.1%) Net finance income/(cost) 0.4 (12.6) Adjusted profit before tax 205.9 273.3 Image Tax (39.4) 19.0% (47.7) 17.1% Outstanding Adjusted profit after tax 166.5 225.6 Shares in issue (weighted in m's) 213.8 233.5 (8.4%
Slide 10: Revenue bridge
10 Revenue bridge £m 2,319 2,301 Grafton Group plc | Final Results
Slide 11: Analysis of organic movement in revenue (constant currency)
11 Analysis of organic movement in revenue (constant currency) £m Like for like business Distribution Grafton Group plc | Final Results
Slide 12: Adjusted operating profit 2022 to 2023 bridge
12 Adjusted operating profit 2022 to 2023 bridge £m 285.9 205.5 Grafton Group plc | Final Results
Slide 13: Analysis of movement in operating profit in like-for-like business
13 Analysis of movement in operating profit in like-for-like business £m Distribution Grafton Group plc | Final Results
Slide 14: Irish Distribution
14 Irish Distribution Revenue (£m) £m 2023 2022 Change 631.0 618.3 Revenue 631.0 618.3 +2.1% Adjusted operating profit pre property 60.9 70.5 (13.5%) Adjusted operating margin pre property 9.7% 11.4% (170bps) 2023 2022 Adjusted operating profit before property profit (£m) Underlying housing demand r
Slide 15: UK Distribution
15 UK Distribution Revenue (£m) £m 2023 2022 Change 838.6 818.1 Revenue 818.1 838.6 (2.4%) Adjusted operating profit pre property 47.3 81.8 (42.3%) Adjusted operating margin pre property 5.8% 9.8% (400bps) 2023 2022 Volumes in UK RMI continued to trend downwards but moderated in H2 Adjusted operatin
Slide 16: Netherlands Distribution
16 Netherlands Distribution Revenue (£m) £m 2023 2022 Change 351.5 336.7 Revenue 351.5 336.7 +4.4% Adjusted operating profit pre property 33.4 37.6 (11.2%) Adjusted operating margin pre property 9.5% 11.2% (170bps) 2023 2022 Adjusted operating profit before property profit (£m) Solid performance in
Slide 17: Finland Distribution
17 Finland Distribution Revenue (£m) £m 2023 2022 Change 139.8 143.2 Revenue 139.8 143.2 (2.4%) Adjusted operating profit pre property 14.2 20.3 (30.1%) Adjusted operating margin pre property 10.2% 14.2% (400bps) 2023 2022 Adjusted operating profit before property profit (£m) Softening in demand in
Slide 18: Retailing
18 Retailing Revenue (£m) £m 2023 2022 Change 258.2 244.0 Revenue 258.2 244.0 +5.8% Adjusted operating profit pre property 32.7 32.6 +0.5% Adjusted operating margin pre property 12.7% 13.3% (60bps) 2023 2022 Solid trading performance with revenue growth of 5.8 per cent (3.9 per Operating profit befo
Slide 19: Manufacturing
19 Manufacturing Revenue (£m) £m 2023 2022 Change 120.6 120.6 Revenue 120.6 120.6 +0.0% Adjusted operating profit pre property 30.3 27.4 +10.5% Adjusted operating margin pre property 25.1% 22.7% +240bps 2023 2022 Operating profit before property profit (£m) CPI EuroMix StairBox Very good performance
Slide 20: Balance Sheet
20 Balance Sheet £m 31 December 31 December 2023 2022 Goodwill and intangible assets 784.0 789.5 Right-of-use assets 401.3 420.1 Tangible assets 396.2 384.8 Working capital 219.2 246.6 Other assets/(liabilities) (89.8) (93.9) Pension (deficit) (5.8) (10.5) Capital Employed 1,705.1 1,736.7 Net (debt)
Slide 21: Balance Sheet
21 Balance Sheet £m 31 December 31 December 2023 2022 Goodwill and intangible assets 784.0 789.5 Right-of-use assets 401.3 420.1 Tangible assets 396.2 384.8 Working capital 219.2 246.6 Other assets/(liabilities) (89.8) (93.9) Pension (deficit) (5.8) (10.5) 31 December 31 December Capital Employed 1
Slide 22: Cash from operations
22 Cash from operations £m 2023 2022 Profit before taxation 183.5 251.7 Net finance (income)/expense (0.4) 12.6 Operating profit 183.1 264.3 Depreciation & amortisation of intangible assets 126.0 114.6 Property profits (total) (0.9) (25.4) Other movements (3.5) (3.4) Decrease/(increase) in working c
Slide 23: Cash flow
23 Cash flow £m 2023 2022 Cash from operations 334.3 278.8 Interest and tax (37.3) (52.7) Payment of lease liabilities (67.7) (58.1) Replacement capex net of asset disposals (23.7) (4.6) Free cash flow 205.6 163.3 Development capex (25.4) (24.7) Dividends (72.6) (73.9) Share repurchase (net of costs
Slide 24: Technical guidance
24 2024 Technical guidance No significant contribution from property profits expected Depreciation and amortisation c.£115m - £120m in total (c.£45m PPE/Intangible Assets and c.£70m-£75m Right-of-Use Assets) 2024 gross capex spend (ex acquisitions and asset disposals) - replacement spend anticipated
Slide 25: Sustainability, current trading, summary and focus
25 Sustainability, current trading, summary and focus Eric Born - CEO 03
Slide 26: Sustainability update
26 Sustainability update Implementing our sustainability agenda • Strong progress demonstrated across five priority areas of sustainability strategy: Planet, Customer & Product, People, Community & Ethics ✓ 2023 Sustainability Performance and Reporting integrated into Annual Report and Accounts ✓ Ne
Slide 27: Current trading
27 Current trading Average daily like-for-like revenue growth Q4 2023 1 Jan 2024 – 29 Feb 2024 Distribution UK (5.4%) (9.0%) Ireland (2.3%) (1.0%) Netherlands 0.0% (2.2%) Finland (10.2%) (10.7%) Deflation and wet Good performance Profitability in first Retailing +2.2% +4.2% weather, in Woodie’s with
Slide 28: Outlook
28 Outlook Ireland RMI and DIY demand expected to be resilient. Housing completions anticipated to increase on the back of Government support UK Cautious on near term outlook for RMI demand with housing volumes expected to be lower than 2023 Netherlands Real income growth expected to support househo
Slide 29: Summary
29 Summary Very solid operating performance in 2023 Leading brands with strong, defendable market positions Opened new stores at Selco, Chadwicks, Isero, Leyland and IKH to continue organic development Executed 5 bolt-on acquisitions in UK, Ireland and Finland All our existing geographic markets are
Slide 30: Focus going forward
30 Focus going forward Continue the proven operating model of lean support centre, working closely with our operating businesses Tight management of cost base to mitigate inflationary pressures Allocate capital through the cycle to our existing brands that have headroom to grow Build on our historic
Slide 31: Questions
31 Questions 04
Slide 32: Appendices
32 Appendices 05
Slide 33: Notes & Definitions
33 Appendix 1 Definitions Notes & Definitions 01 Adjusted earnings per share is earnings before exceptional 04 Adjusted operating profit (pre property profit) is earnings items, acquisition related items, before exceptional items, profit intangible asset amortisation on disposal of Group properties,
Slide 34: Revenue Growth – 2023 v 2022
34 Appendix 2 Revenue Growth – 2023 v 2022 Average daily like-for-like revenue growth Total Revenue Q1 Q2 Q3 Q4 FY 2023 Constant Distribution Sterling Currency UK (3.8%) (0.9%) (3.0%) (5.4%) (3.2%) (2.4%) (2.4%) Ireland (0.5%) (4.5%) 2.6% (2.3%) (1.2%) 0.1% 2.1% Netherlands 4.8% 2.6% 1.6% 0.1% 2.3%
Slide 35: Operating Margin Analysis
35 Appendix 3 Operating Margin Analysis* Operating Margin 2023 & 2022 H1 & H2 H2 2023 H1 2023 H2 2022 H1 2022 UK Distribution 5.9% 5.7% 8.5% 11.0% Irish Distribution 10.2% 9.1% 11.5% 12.4% Netherlands Distribution 7.8% 11.1% 9.8% 12.5% Finland Distribution 10.3% 10.0% 15.1% 13.2% Total Distribution
Slide 36: 2023 revenue & operating profit by geography
36 Appendix 4 2023 revenue & operating profit by geography Ireland Ireland 39% 45% Netherlands Netherlands 15% 2023 15% 2023 Operating Revenue Finland Finland Profit* 6% 6% UK UK 40% 34% * Segmental operating profit before intangible amortisation arising on acquisitions (£19.7m), acquisition related
Slide 37: Thank you
Thank you Grafton Group plc | Final Results