Grafton Group Plc · LSE:GFTU
Grafton — H1 2024 Earnings Presentation
37 slides from Grafton's earnings presentation, August 2024
Slide 1: Grafton Group plc Half Year Results
Grafton Group plc Half Year Results For the six months ended 30 June 2024
Slide 2: Cautionary statement & notes
2 Cautionary statement & notes Cautionary statement Notes Certain statements made in this presentation are forward- Please refer to Notes and Definitions in Appendix 1 looking statements. Such statements are based on current expectations and are subject to a number of risks and As amounts are reflec
Slide 3: Meet the team
3 Meet the team Eric Born David Arnold Chief Executive Chief Financial Officer Officer Grafton Group plc – Interim Results 2024
Slide 4: Introduction & highlights
Introduction & highlights Eric Born, CEO
Slide 5: 2024 First half highlights
5 2024 First half highlights • Robust performance supported by our decentralised operating model with geographic and end-user diversification • Product price deflation continued to negatively impact distribution sales in UK & Ireland • Improved volumes and strong performance in Ireland but volume de
Slide 6: 2024 Financial highlights
6 2024 Financial highlights £m H1 2024 H1 2023 Change Revenue £1,137m £1,189m (4.4%) Adjusted operating profit £83.1m £105.1m (20.9%) Adjusted earnings per share 33.4p 38.1p (12.4%) Interim dividend 10.5p 10.0p +5.0% Adjusted operating profit margin pre property profit 7.3% 8.7% (140bps) Adjusted re
Slide 7: Financial review
Financial review David Arnold, CFO
Slide 8: Income statement
8 Income statement £m H1 2024 H1 2023 Change Revenue 1,137.2 1,189.3 (4.4%) Adjusted operating profit pre property profit 83.1 103.9 (20.0%) Property profit - 1.1 Adjusted operating profit 83.1 105.1 (20.9%) Amortisation1 and acquisition related items (11.7) (10.8) Statutory operating profit 71.3 94
Slide 9: Income statement
9 Income statement £m H1 2024 H1 2023 Change Revenue 1,137.2 1,189.3 (4.4%) Adjusted operating profit pre property profit 83.1 103.9 (20.0%) • Gross margin broadly unchanged Property profit - 1.1 Adjusted operating profit 83.1 105.1 (20.9%) • Overheads tightly controlled 1 Amortisation and acquisiti
Slide 10: Income statement
10 Income statement £m H1 2024 H1 2023 Change Revenue 1,137.2 1,189.3 (4.4%) Adjusted operating profit pre property profit 83.1 103.9 (20.0%) • No significant property profits Property profit - 1.1 anticipated in FY 2024 Adjusted operating profit 83.1 105.1 (20.9%) (H1 2024: £Nil, H1 2023 £1.1m) Amo
Slide 11: Revenue bridge
11 Revenue bridge • 2023 bolt-on acquisitions in Northern Ireland, Finland, the UK and Ireland • Negative FX impact due to weakening of the Euro against GBP 1,189 1,137 Grafton Group plc – Interim Results 2024
Slide 12: Analysis of organic movement in revenue (constant currency)
12 Analysis of organic movement in revenue (constant currency) Like-for-like • Irish businesses performing well • Declines across other regions with UK being key driver Nine new branches added across the Group in 2023/2024 in the Netherlands, Ireland, the UK and Finland Distribution Grafton Group pl
Slide 13: Adjusted operating profit – bridge H1 2023 to H1 2024
Adjusted operating profit – 13 bridge H1 2023 to H1 2024 • Like-for-like business down £20.8m mainly driven by decline in the UK market • 2023 acquisitions generating profits in H1 2024 • Property profit: nil vs. £1.1m in H1 2023 • Negative FX impact due to weakening of the Euro against GBP 105.1 83
Slide 14: Analysis of movement in operating profit in like-for-like business
14 Analysis of movement in operating profit in like-for-like business Like-for-like • Irish businesses performing well • Operating profit decline in other regions driven by challenging markets • Tight control of central costs Distribution Grafton Group plc – Interim Results 2024
Slide 15: Irish Distribution
15 Irish Distribution Revenue £m H1 2024 H1 2023 Change 400.0 317.2 318.1 300.0 Revenue 317.2 318.1 (0.3%) £’m 200.0 Adjusted operating profit pre property 29.7 28.9 +2.5% 100.0 Adjusted operating margin pre property 9.4% 9.1% +30bps 2024 2023 • Positive growth outlook Adjusted operating profit befo
Slide 16: UK Distribution
16 UK Distribution Revenue £m H1 2024 H1 2023 Change 450.0 419.3 394.4 350.0 Revenue 394.4 419.3 (5.9%) £’m 250.0 Adjusted operating profit pre property 12.6 23.9 (47.1%) 150.0 Adjusted operating margin pre property 3.2% 5.7% (250bps) 2024 2023 • Frank Elkins appointed as CEO of Selco & GB Distribut
Slide 17: Netherlands Distribution
17 Netherlands Distribution Revenue £m H1 2024 H1 2023 Change 300.0 200.0 175.2 184.6 Revenue 175.2 184.6 (5.1%) £’m 100.0 Adjusted operating profit pre property 15.2 20.4 (25.7%) 0.0 Adjusted operating margin pre property 8.7% 11.1% (240bps) 2024 2023 • Performance in line with expectations in a ch
Slide 18: Finland Distribution
18 Finland Distribution Revenue £m H1 2024 H1 2023 Change 80.0 65.1 70.4 Revenue 65.1 70.4 (7.6%) £’m Adjusted operating profit pre property 4.7 7.1 (32.9%) 0.0 Adjusted operating margin pre property 7.3% 10.0% (270bps) 2024 2023 • Mika Salokangas has now assumed operational responsibility for IKH A
Slide 19: Retailing
19 Retailing Revenue £m H1 2024 H1 2023 Change 160.0 130.7 131.2 Revenue 130.7 131.2 (0.4%) £’m 80.0 Adjusted operating profit pre property 17.2 16.0 +7.9% 0.0 Adjusted operating margin pre property 13.2% 12.2% +100bps 2024 2023 • Positive start to the year with sales up 2.0% on constant currency Ad
Slide 20: Manufacturing
20 Manufacturing Revenue £m H1 2024 H1 2023 Change 80.0 65.6 54.6 Revenue 54.6 65.6 (16.7%) £’m Adjusted operating profit pre property 11.0 15.3 (28.2%) 0.0 Adjusted operating margin pre property 20.1% 23.3% (320bps) 2024 2023 CPI Mortars StairBox Adjusted operating profit before property profit • C
Slide 21: Balance sheet
21 Balance sheet 30 June 31 December £m 2024 2023 Goodwill and intangible assets 764.9 784.0 Right-of-use assets 381.3 401.3 Tangible assets 392.7 396.2 Working capital 195.2 219.2 Other liabilities (89.8) (89.8) Pension (deficit) (3.8) (5.8) Capital employed 1,640.5 1,705.1 Net cash excluding lease
Slide 22: Cash from operations
22 Cash from operations £m H1 2024 H1 2023 Profit before taxation 71.7 93.6 (Deduct)/Addback Net finance (income)/costs (0.3) 0.8 Operating profit 71.3 94.3 Depreciation & amortisation of software 56.2 51.8 Amortisation of intangible assets arising on acquisitions 10.0 9.9 Property profits (total) -
Slide 23: Cash flow
23 Cash flow £m H1 2024 H1 2023 Cash from operations 161.1 191.3 Interest and tax (12.7) (19.7) Payment of lease liabilities (34.9) (33.1) Replacement capex net of asset disposals (13.9) (12.2) Free cash flow 99.6 126.3 Development capex (11.4) (11.4) Dividends (52.2) (51.6) Share repurchase incl. f
Slide 24: Cash flow
24 Cash flow £m H1 2024 H1 2023 Cash from operations 161.1 191.3 Interest and tax (12.7) (19.7) Payment of lease liabilities (34.9) (33.1) Replacement capex net of asset disposals (13.9) (12.2) Free cash flow 99.6 126.3 Development capex (11.4) (11.4) Dividends (52.2) (51.6) Share repurchase incl. f
Slide 25: Cash flow
25 Cash flow £m H1 2024 H1 2023 Cash from operations 161.1 191.3 Interest and tax (12.7) (19.7) Payment of lease liabilities (34.9) (33.1) Replacement capex net of asset disposals (13.9) (12.2) Free cash flow 99.6 126.3 Development capex (11.4) (11.4) Dividends (52.2) (51.6) Capital to be returned S
Slide 26: Cash flow
26 Cash flow £m H1 2024 H1 2023 Cash from operations 161.1 191.3 Interest and tax (12.7) (19.7) Payment of lease liabilities (34.9) (33.1) Replacement capex net of asset disposals (13.9) (12.2) Free cash flow 99.6 126.3 Development capex (11.4) (11.4) Dividends (52.2) (51.6) Share repurchase incl. f
Slide 27: Business update, outlook & Summary
Business update, outlook & Summary Eric Born, CEO
Slide 28: Business update – drive profitable future growth
28 Business update – drive profitable future growth • Continued new branch openings (2023: 6 branches, 2024: 3 branches in H1) • Ongoing branch refurbishment programme • Continuous process improvement and use of technology to drive efficiencies across our businesses (e.g. successful new ERPs impleme
Slide 29: Business update - ESG
29 Business update - ESG Climate Change • Net zero targets validated by the Science Based Targets Initiative • 2030 transition plan modelled through improvements in efficiency and the use of alternative fuels/renewable energy to reduce scope 1 and 2 emissions and extensive engagement through the sup
Slide 30: Business update - current trading
30 Business update - current trading Average daily like-for-like revenue growth 1 July 2024 – H1 2024 18 August 2024 Distribution Ireland +0.5% +0.2% Total revenue decline in H2 to date has moderated from H1 UK (7.7%) (6.0%) Netherlands (2.7%) (1.3%) Irish businesses continue to perform well Finland
Slide 31: Business update - outlook
31 Business update - outlook Economic growth is expected to moderate Ireland Housing completions expected to continue to increase on the back of Government support Cautious on near term outlook but early signs of improving consumer confidence UK New government’s policies support growth in housebuild
Slide 32: Summary
32 Summary • Robust performance in H1 reflects strength of diversified Group and operating model • Focus on being providers of choice for our customers whilst tightly managing our cost base • Continuous process improvement and use of technology to drive efficiencies and further strengthen our custom
Slide 33: Questions
33 Questions Grafton Group plc – Interim Results 2024
Slide 34: Appendices
Appendices
Slide 35: Appendix 1 Notes & definitions
35 Appendix 1 Notes & definitions Notes As amounts are reflected in £’m some non-material rounding differences may arise. Definitions • Adjusted operating profit margin is adjusted operating profit as a percentage of revenue. • Adjusted earnings per share is earnings before exceptional items, acquis
Slide 36: Appendix 2 Revenue growth – H1 2024 v H1 2023
36 Appendix 2 Revenue growth – H1 2024 v H1 2023 Average Daily Like-for-Like Revenue Growth Six months to 30 June Total Revenue Q1 Q2 2024 1 Jan – 30 June 2024 Constant Distribution Sterling Currency UK (7.3%) (8.2%) (7.7%) (5.9%) (5.9%) Ireland (0.2%) 1.1% 0.5% 2.2% (0.3%) Netherlands (2.5%) (2.9%)
Slide 37: Thank you
Thank you