Grafton Group and Topps Tiles post solid end-of-year revenue growth

London-listed building materials firms Grafton Group and Topps Tiles shrugged off a weakening economy and growing consumer cost pressures to post solid growth in the latter stages of 2022. 

Topps Tiles revealed turnover rose by 10.2 per cent in the final 13 weeks of 2022, with half the expansion credited to the acquisition of Northampton-based construction equipment supplier Pro Tiler Tools last March.

On a like-for-like basis, the group’s retail sales were up 5.1 per cent on the previous year thanks to high order volumes from trade customers, which kept pace during the Christmas and New Year period.

Grafton Group also recorded a solid end to last year, with average daily equivalent revenue rising by 2.6 per cent at constant currency levels, giving it total annual sales growth of 9.5 per cent.

The Dublin-based company’s sales more than doubled in Finland following a massive recovery in demand at its IKH workwear, tools and spare parts business.

Revenues at its Irish and Dutch distribution divisions also grew significantly, with the former aided by buoyant activity in the new build housing and repair, maintenance and improvement market.

Trading was not as strong in the UK because of surging energy prices and squeezed consumer incomes adversely impacting the Selco Builders Warehouse business.

Yet it still posted modest UK growth in overall sales thanks to robust performances from its decorating specialist Leyland SDM and plumbing products seller TG Lynes.

Full-year adjusted operating profits are now predicted to slightly surpass the top end of analysts’ expectations, which currently stands at £243.5million to £249.5million.

Concurrently, Topps Tiles anticipates annual earnings will stay in line with forecasts, with a greater weighting towards the latter half of the period due partly to softening supply chain costs and the impact of recent takeovers.

‘We remain mindful of the macro-economic headwinds which may impact UK consumers and businesses in the forthcoming year,’ remarked Rob Parker, the company’s chief executive. 

But he said that the ‘strong balance sheet, world-class customer service, specialist expertise and ambitious growth strategy gives us confidence that we will continue to deliver value over the medium term.’

Topps Tiles shares had risen by 1.9 per cent to 48p by late Wednesday afternoon, while Grafton Group shares were 3.4 per cent higher at 865.6p. 

Over the past year, the British DIY sector has struggled to sustain elevated demand as the pandemic-induced home renovation boom has worn off amid cost-of-living pressures and people spending more time outside. 

Successive interest rate hikes have also made it more expensive to take out a mortgage, while supply chain disruptions have lifted building material costs. 

The UK’s construction industry recorded the steepest drop in activity since May 2020, according to the latest S&P Global/CIPS UK Construction Purchasing Managers’ Index.

It additionally found that business confidence among constructors has turned negative for only the sixth time since the survey started 25 years previously.