Profits fall at Woodie’s and Chadwicks owner Grafton Group

Adjusted operating profit was down 28.1pc to £205.5m (€240.3m) in 2023.

However, the group, which operates the Woodie’s and Chadwicks businesses in the Irish market, said this was above the top end of analyst forecasts for the year.

Revenues at Grafton Group rose slightly to £2.32bn last year, up from £2.3bn in 2022.

The group pointed to stronger trading in Ireland and the Netherlands compared to the UK and Finland. Cost of living challenges led to a fall in spending on home improvements, while demand for new homes also slowed due to rising costs.

It also pointed to the introduction of cost reduction measures across the business throughout the year, which contributed to its ability to deliver an adjusted operating profit in line with raised guidance in January this year.

Grafton Group invested £49.3m in acquisitions over the year.

The Chadwicks business in Ireland recorded steady sales despite timber and steel price deflation, operating cost inflation and competitive pricing pressure. While profitability was down in the first half, the business operated in line with 2022 levels in the second half of 2023.

Trading was also strong at Woodie’s last year, with revenues rising. However, profitability dipped as a result of economic pressures on customers.

Around £228m was returned to shareholders in dividend payments and share buybacks through the year.

Grafton Group now expects like-for-like revenue to be flat in its current financial year, with first half activity levels likely to be weaker than 2023. However, the group expects improvements in the second half of 2024.

"As interest rates go down and people feel less of price cost squeeze and they feel more confident in having improved household budgets, that confidence will return,” chief executive Eric Born said.

He pointed to demand for repair, maintenance and improvement (RMI) which typically increases alongside consumer confidence.

“RMI is normally the first one into a downturn but is also the first one coming out of the downturn in terms of spend,” he said.

“We operate in a cyclical industry. We have a strong balance sheet and an excellent cash conversion so we will ride through the cycle.”

The group also expects more houses to be built this year in Ireland compared to last year, pointing to a “very good” economy and government initiatives.

"We have to recognise that if you look at the mix of housing being built in Ireland, there are more housing schemes developments and far more apartments than, let’s say, standalone houses being built relative to other years as an overall proportion," he said.

“There is less building material from somewhere like us to be delivered.”

Group average daily sales in the first two months of 2023 were 5.3pc lower than the same period in 2024.

Sales in Woodie’s increased in January and February of this year.

“You see the return of consumer confidence. We have performed well with different products, decorative products have performed particularly strongly,” Mr Born said.