Grafton Group Plc · LSE:GFTU
Grafton — FY2022 Earnings Presentation
41 slides from Grafton's earnings presentation, 2022
Slide 1: Grafton Group plc Final Results
Grafton Group plc Final Results Financial Year Ended 31 December 2022
Slide 2: Cautionary statement & notes
Cautionary statement & notes Cautionary statement Notes and Definitions Certain statements made in this presentation are forward-looking Please refer to Notes and Definitions in Appendix 1 statements. Such statements are based on current expectations and are subject to a number of risks and uncertai
Slide 3: Eric Born, CEO and David Arnold, CFO
Eric Born David Arnold Chief Executive Officer Chief Financial Officer Grafton Group plc – Final Results 2022 3
Slide 4: Introduction & highlights
Introduction & highlights ERIC BORN, CEO
Slide 5: First impressions
First impressions • Good business which aligned with my expectations • Strong brands that have excellent market positions • Experienced and driven management teams • Geographically well diversified revenue and profit streams • Opportunities for further organic growth and bolt on expansion in existin
Slide 6: 2022 Review
2022 Review • Strong trading performance from diversified earnings base • 60 per cent of operating profit generated outside the UK • Excellent performance in distribution businesses in Ireland and the Netherlands • Volumes and profitability lower in Selco against a strong comparator and softer backd
Slide 7: Financial highlights
2022 Financial highlights £m 2022 2021 Change Revenue £2,301m £2,110m +9.1% Adjusted operating profit £285.9m £288.0m (0.7%) Adjusted earnings per share 96.6p 93.0p +3.9% Dividend 33.0p 30.5p +8.2% Net cash (before IFRS 16 leases) £458.2m £588.0m (£129.8m) Adjusted operating profit margin pre proper
Slide 8: Financial review
Financial review DAVID ARNOLD, CFO
Slide 9: Income statement
Income statement Continuing operations £m 2022 2021 Change Revenue 2,301.5 2,109.9 +9.1% Adjusted operating profit pre property profit 260.5 271.2 (4.0%) Property profit 25.4 16.7 Adjusted operating profit 285.9 288.0 (0.7%) Amortisation1 and acquisition related items (21.6) (18.8) Statutory operati
Slide 10: Revenue bridge
Revenue bridge 2,301 2,110 Grafton Group plc – Final Results 2022 10
Slide 11: Analysis of organic movement in revenue (constant currency)
Analysis of organic movement in revenue (constant currency) Like for like business Distribution Grafton Group plc – Final Results 2022 11
Slide 12: Adjusted operating profit – bridge 2021 to 2022
Adjusted operating profit – bridge 2021 to 2022 288.0 285.9 Grafton Group plc – Final Results 2022 12
Slide 13: Analysis of movement in operating profit in like-for-like business
Analysis of movement in operating profit in like-for-like business Distribution Grafton Group plc – Final Results 2022 13
Slide 14: UK Distribution
UK Distribution Revenue 838.6 £m 2022 2021 Change 821.9 800.0 Revenue 838.6 821.9 +2.0% £’m 700.0 Adjusted operating profit pre property 81.8 102.5 (20.2%) 600.0 Adjusted operating margin pre property 9.8% 12.5% (270bps) 2022 2021 Adjusted operating profit before property • Volumes in UK RMI lower b
Slide 15: Irish Distribution
Irish Distribution Revenue £m 2022 2021 Change 800.0 618.3 600.0 544.3 Revenue 618.3 544.3 +13.6% £’m 400.0 Adjusted operating profit pre property 70.5 66.8 +5.5% 200.0 0.0 Adjusted operating margin pre property 11.4% 12.3% (90bps) 2022 2021 Adjusted operating profit before property • Very strong pe
Slide 16: Netherlands Distribution
Netherlands Distribution Revenue £m 2022 2021 Change 400.0 336.7 290.5 300.0 Revenue 336.7 290.5 +15.9% £’m 200.0 Adjusted operating profit pre property 37.6 30.5 +23.2% 100.0 0.0 Adjusted operating margin pre property 11.2% 10.5% +70bps 2022 2021 Adjusted operating profit before property • Excellen
Slide 17: Finland Distribution
Finland Distribution Revenue £m 2022 2021 Change 200.0 143.2 150.0 Revenue 143.2 70.8 +102.2% £’m 100.0 70.8 Adjusted operating profit pre property 20.3 10.0 +104.2% 50.0 0.0 Adjusted operating margin pre property 14.2% 14.1% +10bps 2022 2021 Adjusted operating profit before property • First full ye
Slide 18: Retailing
Retailing Revenue £m 2022 2021 Change 320.0 282.8 270.0 244.0 Revenue 244.0 282.8 (13.7%) £’m 220.0 Adjusted operating profit pre property 32.6 50.9 (35.9%) 170.0 120.0 Adjusted operating margin pre property 13.3% 18.0% (470bps) 2022 2021 Operating profit before property profit • Revenue normalised
Slide 19: Manufacturing
Manufacturing Revenue £m 2022 2021 Change 150.0 120.6 99.6 100.0 Revenue 120.6 99.6 +21.1% £’m 50.0 Adjusted operating profit pre property 27.4 24.0 +13.9% 0.0 Adjusted operating margin pre property 22.7% 24.1% (140bps) 2022 2021 CPI EuroMix StairBox Operating profit before property profit • Revenue
Slide 20: Balance Sheet
Balance Sheet 31 December 31 December 2022 2021 Goodwill and intangible assets 789.5 744.1 Right-of-use assets 420.1 421.3 Tangible assets 384.8 351.9 Working capital 246.6 158.5 Other assets/(liabilities) (93.9) (83.8) Pension (deficit) (10.5) (11.5) 1,736.7 1,580.6 Net cash including IFRS 16 lease
Slide 21: Balance Sheet
Balance Sheet 31 December 31 December 2022 2021 31 December 31 December Inventories 399.6 344.2 2022 2021 Trade debtors 267.7 233.5 Goodwill and intangible assets 789.5 744.1 Trade payables (420.7) (419.1) Right-of-use assets 420.1 421.3 246.6 158.5 Tangible assets 384.8 351.9 Working capital 246
Slide 22: Cash from operations
Cash from operations £m 2022 2021 Profit before taxation from continuing operations 251.7 249.8 Profit before taxation from discontinued operations - 143.8 Profit on disposal of Group businesses - (125.1) Net finance costs 12.6 20.6 Operating profit (post impact of profit on disposals) 264.3 289.1 D
Slide 23: Cash flow
Cash flow £m 2022 2021 Cash from operations 278.8 303.2 Interest and tax (52.7) (64.0) Replacement capex net of asset disposals (4.6) (2.3) Free cash flow 221.4 237.0 Development capex (24.7) (19.9) Dividends (73.9) (84.9) Share (repurchase)/issue (140.4) 3.0 Acquisitions & business disposals (incl.
Slide 24: 2023 technical guidance
2023 technical guidance No significant contribution from property profits expected Depreciation and amortisation c.£100m - £105m in total (c.£40m on a pre IFRS 16 basis) 2023 gross capex spend (ex acquisitions and asset disposals) - replacement spend anticipated of c.£30m and development of c.£35m N
Slide 25: Summary, current trading & outlook
Summary, current trading & outlook ERIC BORN, CEO
Slide 26: Importance of geographical diversity - 2022 revenue & operating profit by geography
Importance of geographical diversity - 2022 revenue & operating profit by geography 2022 2022 Revenue Finland Operating Profit* Finland 6% 7% Netherlands Netherlands 15% 14% UK UK 41% 39% Ireland Ireland 38% 40% UK Ireland Netherlands Finland UK Ireland Netherlands Finland * Excluding central activi
Slide 27: Disciplined capital allocation on the back of strong cash generation and balance sheet
Disciplined capital allocation on the back of strong cash generation and balance sheet Continuing to follow our disciplined capital allocation policy FY 2022 £m Acquisitions 46.0 Ongoing activity examining potential acquisitions – firepower to execute quickly for the right transactions Dividend 73.9
Slide 28: Sustainability update
Sustainability update Implementing our sustainability agenda Sustainability Report published today. Whilst there is still much to do, the business has demonstrated strong progress in 2022 across 5 priority areas of sustainability strategy. Planet Customer & Product • 11% reduction in Scope 1 & 2 tCO
Slide 29: Sustainability update
Sustainability update Implementing our sustainability agenda People Community Diversity & Inclusion • >£1m invested in communities including >£250,000 donated to Red Cross • Important focus for all teams working to encourage an inclusive culture • Support for communities included cash, volunteering
Slide 30: Current trading
Current trading Average daily like-for-like revenue growth 1 Jan 2023 – Q4 2022 19 Feb 2023 Distribution UK (0.7%) (1.6%) 2023 has commenced in line with our expectations Ireland +2.4% (0.1%) Netherlands +9.7% +0.4% In general, volumes slightly lower than same period last year and price Finland +5.7
Slide 31: Summary and outlook
Summary and outlook • Group performance benefited from our portfolio of strongly positioned, higher margin businesses • Common themes across our geographies • RMI markets which were focused on smaller, discretionary expenditure felt earliest impact from weaker consumer confidence – fall in real inco
Slide 32: Summary and outlook
Summary and outlook • Strength of our businesses, our geographic diversity and balance sheet leaves us well placed to execute our growth strategy over the medium term • We will continue to remain disciplined in our allocation of capital • Build on our current fundamentals by investing in our brands
Slide 33: Questions
Questions 33
Slide 34: Appendices
Appendices
Slide 35: Appendix 1 Notes & Definitions
Appendix 1 Notes & Definitions Notes Definitions • Adjusted earnings per share is earnings before exceptional items, As amounts are reflected in £’m some non- acquisition related items, intangible asset amortisation arising on material rounding differences may arise. acquisitions and before profit/l
Slide 36: Appendix 2 Revenue Growth – 2022 v 2021
Appendix 2 Revenue Growth – 2022 v 2021 Average Daily Like-for-Like Revenue Growth Total Revenue Q1 Q2 Q3 Q4 FY 2022 Constant Distribution Sterling Currency UK 4.6% (4.0%) (4.2%) (0.7%) (1.2%) 2.0% 2.0% Ireland 41.9% 4.3% 1.9% 2.4% 10.3% 14.4% 13.6% Netherlands 8.2% 7.0% 6.8% 9.7% 9.0% 16.8% 15.9% F
Slide 37: Appendix 3 Revenue bridge 3 Year (2019 - 2022)
Appendix 3 Revenue bridge 3 Year (2019 - 2022) Grafton Group plc – Final Results 2022 37
Slide 38: Appendix 4 Analysis of organic movement in 3 Year revenue
Appendix 4 Analysis of organic movement in 3 Year revenue (2019 – 2022) (constant currency) Like for like business Distribution Grafton Group plc – Final Results 2022 38
Slide 39: Appendix 5 Adjusted operating profit – 3 Year bridge
Appendix 5 Adjusted operating profit – 3 Year bridge (2019 to 2022) Grafton Group plc – Final Results 2022 39
Slide 40: Appendix 6 Analysis of movement in operating profit 3 Year Bridge
Appendix 6 Analysis of movement in operating profit in like-for-like Business 3 Year Bridge (2019 – 2022) Distribution Grafton Group plc – Final Results 2022 40
Slide 41: Appendix 7 Operating Margin Analysis
Appendix 7 Operating Margin Analysis* Operating Margin 2022 & 2021 H1 & H2 H2 H1 H2 H1 2022 2022 2021 2021 UK Distribution 8.5% 11.0% 11.6% 13.3% Irish Distribution 11.5% 12.4% 12.8% 11.6% Netherlands Distribution 9.8% 12.5% 10.2% 10.8% Finland Distribution 15.1% 13.2% 14.1% - Total Distribution 9.8