Grafton Group posts £132.7m pre-tax profit for 2020

The group operates building product distribution and DIY retail businesses in the UK, Ireland and Europe, with businesses including Buildbase, Selco, Chadwicks, Woodie’s, MacBlair and the staircase manufacturer StairBox.

Total 2020 revenue was £2.5bn (2019: £2.67bn), a 6.1% decline. Pre-tax profits declined from £172.6m in 2019 to £132.7m, a 23.1% reverse. It saw a strong recovery in profitability in the second half of 2020 with adjusted operating profit up 47%, reflecting robust residential repair, maintenance and improvement markets in the UK and Ireland.

The UK distribution business saw revenue reach £1.46bn (2019: £1.71bn) in 2020, down by 14.6%, while adjusted operating profits were down 26.7% to £79.1m (2019: £108m).

Revenue in the UK distribution business was down for the year because of the measures adopted in the second quarter to contain the spread of Covid-19 that resulted in closure of the majority of branches on March 24. A full-service offering was resumed in all branches by the end of June. First half revenue in the like-for-like business declined by £258.6m due to the pandemic.

The 149-branch Buildbase saw first half revenue down by 30.1%.

A stronger recovery was seen with builders focused on private RMI work whilst activity levels with local developers were slightly softer than the prior year. A number of underperforming branches were closed as part of the strong focus on cost control and profit improvement.

A significant increase in online revenue was recorded - from £0.5m in 2019 to £7m in 2020.

The Northern Ireland MacBlair distribution saw annual revenue decline by 6% - a 20% fall in the first half and growth of 8.5% in the second half.

The Ireland distribution business posted revenue of £463.9m (2019: £464.8m), with adjusted operating profits of £41.8m (2019: £47.1m), down 12.7%. The programme for rebranding the distribution branches in Ireland under the Chadwicks brand continued with the upgrading and rebranding of six more branches.

“Whilst the outlook for the Group’s businesses remains uncertain, we are optimistic that the successful rollout of vaccines over the coming months will mean that overall economic and construction related activity increases,” the group said.

“It is likely that Governments and health authorities will require social distancing and other prevention measures to remain in place for some time, including local or national lockdowns which may have a bearing on productivity for our end customers.”

It warned that the pandemic may have significant negative impacts in the medium and long term on the Group’s businesses, with changes in consumer behaviour as a result of government-imposed lock downs and the need for people to self-quarantine or self-isolate or observe social distancing for an indeterminate period of time possibly leading to the closure of distribution branches, DIY, Home and Garden stores, mortar manufacturing plants and StairBox.