Woodies-owner Grafton Group sees profits decline nearly 30%

Grafton Group said that Woodies performed well during 2023 with revenue growing 3.9%. 

Woodies-owner Grafton Group saw a near 30% drop in adjusted operating profit during 2023 with challenges expected to remain into this year.

According to the company’s latest annual results, revenue increased only slightly by 0.8% to £2.32bn (€2.71bn). Operating profit declined 28.1% to £205.5m (€240m) compared to the £285.9m (€333.96m) during 2022.

While it is a substantial drop in operating profit, the company noted that it is still above what analysts had forecast.

The company’s net cash as of the end of the year stood at £379.7m (€443.5m).

Chief executive of Grafton Group Eric Born said while trading conditions are expected to remain challenges during 2024, demand is supported by a “structural under supply of new homes” as well as an “ageing housing stock” that requires upgrading and renovation.

“With a somewhat improving economic backdrop, we are confident that Grafton is exceptionally well positioned to benefit as the cycle turns, markets normalise and consumer confidence improves,” he said.

Grafton Group said the Woodie’s retail business performed well during the year growing revenue by 3.9% Grafton Group said there was a recovery in confidence in the Irish market after weakening in 2022 as customers remained concerned about their financial circumstances. 

The improvement in sentiment from a low base was prompted by an easing of cost-of-living pressures and an expectation of lower inflation and interest rates.

The company said Chadwicks, which it also owns, “responded well to evolving market conditions” and managed to contend with “significant steel and timber price deflation, competitive pricing pressure in flat markets and operating cost inflation”.

Profitability at Chadwicks declined in the first half and the business operated in line with the prior year in the second half, the Grafton Group said.

Despite volume declines in its UK manufacturing business as well as distribution markets, these divisions of the business performed well considering the challenges present.

Mr Born said the company expects to continue to benefit from the spread of its operations across four geographies and exposure to a broad range of end-markets.

“Our strong balance sheet and record of cash generation will stand us in good stead. We will allocate capital as required to ensure that the Group’s brands continue to support their customers and strengthen their market positions,” he said.

The company paid out £228.3m to shareholders during 2023 through dividend payments and share buybacks.

The company operates numerous brands across Ireland, the UK, the Netherlands and Finland.