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

London-listed building materials firms Grafton Group and Topps Tiles were able to shake off a weakening economy and mounting consumer cost pressures to deliver solid growth in the latter stages of 2022.

Topps Tiles revealed that sales increased 10.2 percent in the final 13 weeks of 2022, with half of the expansion attributable to its 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 percent year-on-year on the back of high order volumes from trade customers, which kept pace over the Christmas and New Year period.

Grafton group also posted a solid end to last year, with average daily equivalent sales increasing 2.6 percent at constant exchange rates, bringing total annual sales growth to 9.5 percent.

The Dublin-based company’s turnover has more than doubled in Finland after a huge recovery in demand at its IKH workwear and personal protective equipment business.

Revenues from the Irish and Dutch distribution divisions also grew significantly, with the former helped by buoyant activity in the new build homes and repair, maintenance and improvement markets.

Trading was not as strong in the UK due to rising energy prices and pressured consumer incomes negatively impacting Selco Builders Warehouse business.

However, it still posted modest growth in overall UK sales thanks to the strong performance of its decoration specialist Leyland SDM and sanitary products retailer TG Lynes.

Full-year adjusted operating profits are now expected to be slightly above the high end of analyst expectations, currently at £243.5m to £249.5m.

At the same time, Topps Tiles expects annual revenues to remain in line with forecasts, with an increased weight towards the second half of the period, due in part to lower supply chain costs and rising gas payments.

“We remain aware of the macroeconomic headwinds that could affect UK consumers and businesses over the coming year,” said Rob Parker, CEO of the company.

But he added that the company’s “balance sheet, world-class customer service, specialist expertise and ambitious growth strategy give us confidence that we will continue to deliver value over the medium term.”

Topps Tiles Stock fell 0.6 percent to 46.8 p on Wednesday, while Grafton Group Shares ended up 2.3 percent higher at 857p.

Britain’s DIY sector has struggled to sustain increased demand as the pandemic-induced home renovation boom has worn off amid cost-of-living pressures and people spending more time outside.

Successive rises in interest rates have made mortgages more expensive, while logistical disruptions have driven up construction material costs.

According to the most recent S&P Global/CIPS UK Construction Purchasing Managers’ Index, the UK construction sector recorded its strongest decline in activity since May 2020 in December.

In addition, it found that business confidence among manufacturers had turned negative for only the sixth time since the survey began.