The Group today reported pre-tax profits of €33.5m for the year to end of December, up from €10.3m the previous year. Revenues for the year rose by 6% to €2.2 billion from €2.05 billion, while its underlying operating profit jumped 33% to €72.9m from €54.7m.
The Group said the second interim dividend rose by 16% to 5.5 cent, which gives a total dividend for the year of 8.5 cent, up 13% on the 7.5 total dividend for 2011.The Group delivered good profit growth despite challenging trading conditions in its markets. The positive outcome for the year demonstrates the benefits of the restructuring and self-help measures implemented over the past eighteen months.
Group revenues increased by 5.7 per cent to €2.17 billion in 2012 from €2.05 billion in 2011 and by 0.6 per cent in constant currency. The increase in revenue includes €105 million of a currency gain on translation of UK revenue at a more favourable average sterling/euro exchange rate. The Belgian joint venture contributed increased revenue of €17.1 million to €38.0 million (2011: €20.9 million).
Underlying operating profit (before exceptional items and amortisation) increased by 32 per cent to €75.2 million (2011: €56.9 million). This comprised growth of 19 per cent to €31.3 million in the first half and growth of 43 per cent to €43.9 million in the second half. Underlying profit before taxation (before exceptional items and amortisation) increased by 39 per cent to €61.9 million (2011: €44.5 million).
Statutory profit before tax increased to €33.5 million from €10.3 million and statutory profit after tax increased to €41.1 million from €2.5 million.
The UK merchanting business increased sterling turnover by 3.1 per cent and improved its competitive position in a weak RMI market that experienced a small decline in volumes. Operating profit increased by 21.9 per cent in constant currency as a result of better cost control, improved margin management and integration benefits. UK merchanting accounted for 74 per cent of Group revenue. Despite a significant decline in turnover in the Irish merchanting branches, due to weak residential new build and RMI markets, operating profit was only moderately lower due to costs savings.
Profitability in the retailing business in Ireland was impacted by weak retail spending and adverse weather in the first half but recovered in the second half with the benefit of an easing in the pace of decline in revenue and lower overheads. The manufacturing business was restructured and returned to profitability.
The Group operating profit margin increased by 70 basis points to 3.5 per cent from 2.8 per cent.
The Group continued to implement essential restructuring and cost saving measures principally in response to the decline in volumes and excess capacity in the merchanting branches in the UK and Ireland and in the retailing business in Ireland. The costs of restructuring measures implemented amounted to €26.2 million. Management believes that the major cost of restructuring is now complete.
The Group generated cashflow of €105.7 million (2011: €96.9 million) from operations and ended the year with shareholders’ equity of €1.0 billion and a gearing ratio of 20 per cent.
Dividend
The second interim dividend has been increased by 16 per cent to 5.5 cent (2011: 4.75 cent). This gives a total dividend for the year of 8.5 cent, an increase of 13 per cent from 7.5 cent for 2011. The decision to increase the dividend is based on the Boards progressive dividend policy driven by growth in underlying profit, cash flow generated from operations and balance sheet strength.
