Grafton Group (GFTU) H1 2024 earnings summary

Executive summary

• Delivered robust H1 2024 performance despite challenging market conditions, with flat gross margins and resilience supported by strong Irish operations and tight cost control.

• Revenue declined 4.4% year-over-year to £1,137m, with adjusted operating profit down 20.9% to £83.1m.

• Strong free cash flow generation enabled a 5% interim dividend increase to 10.5p and a new £30m share buyback, with £104.8m returned to shareholders.

• Continued investment in branch network, technology, and bolt-on acquisitions to strengthen market position.

• Maintained a strong balance sheet to support organic and inorganic growth, reaffirming full-year expectations.

Financial highlights

• Adjusted EPS fell 12.4% to 33.4p; adjusted operating margin pre-property profit at 7.3%; adjusted ROCE at 11.1%.

• Free cash flow conversion remained strong at 120%; net cash before leases at £361.1m; net debt including leases at £46.8m.

• Statutory operating profit was £71.3m, down 24.4%; gearing at 2.9%; liquidity at £822.7m.

• Interim dividend increased 5% to 10.5p per share.

• Capital expenditure was £23.3m, with £2.8m invested in software.

Outlook and guidance

• Full-year adjusted operating profit expected in line with consensus (£170.9m), with key trading season ahead.

• Trading conditions remain challenging, especially outside Ireland, but inflation is moderating and interest rate cuts are expected to support recovery.

• Irish outlook remains positive with government support; UK cautious but early signs of improved consumer confidence; Netherlands and Finland show signs of stabilization.

• Price deflation is moderating; no significant price movement expected in H2.

• Group is well positioned for growth as market conditions improve.