Grafton Group predicts economic recovery to continue at moderated rate

28 February 2022

Grafton Group predicts the UK economy’s recovery will continue, albeit at a moderating pace.

The company, which gave its outlook forecast in its annual published results, added that the willingness of households to undertake major projects due to the squeeze on real incomes caused by high rates of inflation and the cost and availability of labour in a tight market are possible headwinds for the RMI market.

Grafton’s 2021 revenues were up 25% on a year ago to £2.11bn, while adjusted pre-tax profits were up 83.5% to £268.6m. These results are presented for continuing operations following the sale of the Group’s Traditional Merchanting business in Britain including Buildbase & The Timber Group (Beaumont / Brewer / L&G) on December 31, 2021 to Huws Gray Group for £520m.

The 2020 results have been restated accordingly. 

Following the divestment of the Traditional Merchanting Business in Great Britain, the Group’s distribution business in the UK now comprises Selco, Leyland SDM, MacBlair and TG Lynes.

The UK distribution business recorded revenues of £821.9m, up 30% on 2020, while adjusting operating profits grew by 102% to £113m.

The revenue growth of reflects a continuation of the strong demand trends that developed in the second half of last year and a weaker performance in the second quarter of 2020.

Selco now makes up three-quarters of the UK distribution business and opened three new branches in 2021, increasing the estate to 72. The target is to reach 100 branches by 2026.

“Selco achieved a significant step up in revenue and profitability,” said Gavin Slark, Chief Executive Officer

“Divestment of the lower margin UK distribution businesses and the allocation of capital to new Selco branches over recent years has resulted in a planned structural increase in the operating profit margin.”

Meanwhile, the Woodie’s DIY, Home and Garden retail business in Ireland benefitted from an exceptional level of demand in the first half of 2021 which eased following the reopening of non-essential retail.

The Irish distribution business recorded 2021 revenues of £544.3m, up 21.8% on a year ago, while adjusted operating profits were £68.2m (2020: £41.8m) – a 63% increase.

Another Grafton-owned business is staircase manufacturer StairBox. This business had an operating margin of 34.2% for the year, establishing a new record for a Grafton business.

Selco is now a main focus for Grafton Group's UK distribution business