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Final Results Year Ended 31 December 2012

Final Results Year Ended 31 December 2012. Financial Highlights. Revenue up 6% to €2.2 billion and by 0.6% in constant currency Underlying operating profit up 32% to €75.2 million from €56.9 million (before exceptional items and amortisation)

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Final Results Year Ended 31 December 2012

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  1. Final ResultsYear Ended 31 December 2012

  2. Financial Highlights • Revenue up 6% to €2.2 billion and by 0.6% in constant currency • Underlying operating profit up 32% to €75.2 million from €56.9 million (before exceptional items and amortisation) • Group operating profit margin increased by 70 basis points to 3.5% from 2.8% • Underlying profit before taxation up 39% to €61.9 million from €44.5 million (before exceptional items and amortisation) • Underlying adjusted basic earnings per share up 27% to 19.5 cent from 15.4 cent • Dividend up by 13% for year to 8.5 cent including second interim dividend of 5.5cent • Strong cash generation from operations of €106 million, up from €97 million • EBITDA was €114.7 million (2011: €97.4 million) • Shareholders’ equity of €1 billion and year-end gearing of 20%

  3. Operating Highlights • Profit increase driven by UK merchanting business which outperformed in a weak market • UK merchanting operating margin increased by 75 basis points to 4.85% from 4.10% • Lower costs mainly offset impact of revenue decline in merchanting branches in Ireland • Second half profit recovery in Retailing business in Ireland • Manufacturing business returned to profit following restructuring • All three divisions of Group profitable

  4. Revenue by Business Segment and Geography Revenue by Business Segment Revenue by Geographic Area Merchanting 89% UK76% €2.17bn €2.17bn Ireland 22% Retailing 9% Belgium2% Manufacturing 2%

  5. UK Merchanting 2012 2011 €’000 €’000 % Change Reported Constant Currency • Market Trading • Merchanting volume decline estimated at 2% • Growth in average daily like for like turnover of 1.7% • Business traded ahead of the market • Increased turnover and profit in Buildbase, Selco, Jacksons, Plumbase and Macnaughton Blair • Civils & Lintels business exposed to housing and infrastructure markets performed strongly • Economy flat over the past two years • Housing transactions increased

  6. UK Merchanting Self-help Measures • Cost reductions and development of the hire division in Buildbase • Sales campaigns in Plumbase to increase market position • Turnover growth in more recently opened Selco stores • Integration of three specialist businesses engaged in the distribution of drywall and insulation products • Two bathroom distribution businesses merged • Gross margin increased by 76 basis points • Operating margin increased by 75 basis points to 4.85% from 4.10%

  7. UK Merchanting Acquisitions and Developments • Selco opened new branches in Hanworth, South East London in July and Tottenham, North London in October • Buildbase acquired Electricbase and added a number of branch implants for electrical products • Two branches acquired by Civils & Lintels division • Macnaughton Blair acquired Brooks, a two branch merchanting business in Northern Ireland • Two merchanting branches were opened under the Jacksons and Plumbase brands • NDI opened a drywall and insulation branch in Newport • Hirebase centres added to a number of UK builders merchanting branches

  8. Irish Merchanting 2012 2011 €’000 €’000 % Change • Market Trading • Turnover declined by 8.5% • Improved market position – a number of competitors reduced capacity or exited market • Gross margin maintained despite competitive pressure and overheads cut by 10% (€7.8m) • Cost savings offset most of the impact on profit of the decline in turnover • Branch consolidations in Dublin, Cork and Limerick • Upgrade of branch showrooms/self-select areas completed • Plumbing and heating ranges extended using branch implants • Relocation of Gorey branch • New Plumb Centre in Glasnevin, Dublin • Modest export driven growth in 2012 • Domestic demand weak as household spending continued to decline • Housing market has declined to an unsustainable level - completions estimated at 4,500 units for 2012 • RMI market down due to fall in discretionary spending • Decline in housing investment estimated at 16%

  9. Belgium Merchanting 2012 2011 €’000 €’000 % Change • Market Trading • Turnover of JV €59 million in 2012 • Acquisition of Holvoet increased annualised turnover to €75 million • JV trades from 11 branches in South West Belgium • Group’s shareholding increased to 65% from 53% • Investment of €30 million to date in Belgium Merchanting market • Marginal contraction in economic growth in 2012 • Economy affected by slow down in neighbouring export markets, especially Germany • Demographic pressure to increase housing stock • 2012 housing completions down but housing starts recovered

  10. Retailing 2012 2011 €’000 €’000 % Change • Market Trading • Turnover down by 9.2% • Trading affected by decline in consumer spending and adverse weather in second quarter which reduced demand for outdoor products • Fall in transactions by 6.2% - average transaction values down by 2.1% - change in mix • Glasnevin and Blanchardtown stores extended • Tallaght store upgraded • Successful outcome to Atlantic Home Care Ltd examinership – two store closures and rents reduced to open market levels • Downward trend in consumer spending continued in 2012 • Decline in disposable incomes, a weak labour market and high savings ratio

  11. Manufacturing 2012 2011 €’000 €’000 % Change • Market Trading • Division returned to profitability • UK mortar business increased profit on flat turnover • MFP, the PVC drainage and roofline products business, operated at breakeven • Wrights Windows business was divested to senior management • CPI, the concrete products business, closed • Volumes lower in UK mortar market due to fall in housing starts • Mortgage availability a constraint on demand for new housing

  12. Full-Year Results Pre - Exceptional Items & Amortisation % Change on prior period Reported Constant Currency 2012 2011 €m €m * Pre amortisation 12

  13. Revenue Analysis €m 2,171 Merchanting 2,054 UK Merchanting

  14. Operating Profit Analysis €’000 Merchanting 75,177 56,931

  15. Cash Flow €m 106 75 74

  16. Free Cash Flow and Net Debt 226 202

  17. Net Debt & Shareholders’ Equity 2007 2008 2009 2010 2011 2012

  18. Debt Facilities Maturity Profile • Total Group debt facilities amount to €457m of which €98m was undrawn at 31 December 2012 • Weighted average maturity profile of almost three years

  19. Debt Covenants 2012 2011

  20. Summary Balance Sheet 31 December 31 December 2012 2011 Change €m €m €m Change€m

  21. Operating Margin History (Core – Before Central Costs) Year UK ROI Group* *Includes Belgium from 2011

  22. Outlook UK • Slow but sustained recovery forecast for UK economy • Near term growth expected to remain weak • Declining real incomes likely to put consumer spending under pressure • Increase in housing transactions and mortgage approvals supportive of volume growth in RMI market • Survey evidence indicates pent-up demand for RMI projects • New phase of measures to increase profit in Merchanting business

  23. Outlook Ireland • Domestic economy starting to stabilise – after contracting for five years • Small decline in consumer spending forecast for 2013 • House price stabilisation expected to become more broadly based geographically • Housing transactions and mortgage approvals increasing from a very low base

  24. Strategic Focus • Major restructuring programmes of recent years now complete • Margin growth in UK merchantingbranches from current level of 4.85% • Development of Selco branch network – new London stores to open in Wimbledon and Old Kent Road • Participate selectively in further consolidation in UK merchanting market • Protect profit in Ireland until the domestic economy stabilises • Continue strategic review of possible development opportunities outside of the UK, Ireland and Belgium • Maintaining strong cash generation and strong balance sheet

  25. Summary and Conclusion • Strong operating profit improvement in difficult markets on flat turnover • Portfolio of resilient businesses in UK that improved their market positions • Irish brands traded ahead of a weak market • High operating cash flow, reduced cost base and spare capacity in branch network • Good platform to benefit from any recovery in market conditions from current cyclical lows

  26. Locations Merchanting Ireland Merchanting UK Manufacturing Belgium .co.uk DIY Ireland

  27. Supplementary Information

  28. UK Housing Transactions – 2006 – 2012* 28 * Quarterly Seasonally Adjusted

  29. UK Housing Starts & Completions: 1998 – 2012 29

  30. UK Mortgage Approvals UK: 2008 – 2012 30

  31. House Completions – Ireland 1990 - 2012 Historic Lows Current activity is at an unsustainably low level

  32. Mortgages Issued in Ireland: 2002 – 2012 32

  33. Estimated UK Merchanting League Table Circa 2,000 independents 3rd Largest Builders Merchant Sector Turnover £12 billion plus Independents £4.6 billion plus

  34. For Further Information Gavin Slark Chief Executive Officer Colm Ó Nualláin Finance Director Charles Rinn Group Financial Controller / Secretary Address: Grafton Group plc,Heron House, Corrig Road, Sandyford Industrial Estate, Dublin 18 Telephone: +353 1 216 0600 Fax: +353 1 295 4470 Email: email@graftonplc.com Web: www.graftonplc.com

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