Grafton Group (GFTU) H2 2024 earnings summary

Executive summary

• Adjusted operating profit pre-property reached £173.5m, slightly ahead of expectations, reflecting resilience amid challenging macroeconomic conditions, especially in the UK and Finland.

• Geographic diversification and early cost mitigation actions supported resilience and ongoing investment to strengthen market positions.

• Acquisition of Salvador Escoda marked entry into the Spanish HVAC market, providing a new growth platform in a fragmented market.

• Strong cash conversion (100% of adjusted operating profit) enabled £154.1m returned to shareholders and a 2.8% increase in the final dividend.

• Robust balance sheet supports future growth capital deployment.

Financial highlights

• Revenue was £2.28bn, down 1.6% year-over-year, with organic revenue decline offset by acquisitions.

• Adjusted operating profit (pre-property) was £173.5m; including property profit, it was £177.5m, down 13.6% from 2023.

• Adjusted EPS was £0.71, down 7.8% year-over-year, with share buybacks supporting EPS.

• Operating margin pre-property was 7.6%, 120bps lower than prior year.

• Free cash conversion at 100.4%; net debt (including leases) at £131.7m.

Outlook and guidance

• Cautious near-term outlook, especially for UK RMI, but positive medium/long-term growth prospects due to structural housing shortages in all markets.

• Expect economic growth and construction market improvement in Ireland and gradual recovery in the Netherlands and Finland.

• Spain expected to deliver continued growth, with strong demand and structural housing shortage.

• No significant short-term uptick in product pricing or volumes anticipated.

• Technical guidance for 2025: finance charge £9–10m, tax rate ~20.4%, depreciation/amortisation (incl. leases) ~£150m, capex £60–65m.