Genuit meets full-year profit forecasts as markets stabilise

(Sharecast News) - Building products group Genuit saw a return to underlying growth in the second half as market conditions stabilised, and said it expects to offset impending wage bill increases through operational improvements this year. The company, which provides water, climate and ventilation solutions for the built environment, had warned changes in the Autumn Budget - notably minimum wage increases and higher National Insurance contributions - would add £5m to the cost base this year.

"The group is targeting, through productivity and balanced cost and price management, to offset the previously disclosed £5m in-year impact of the Autumn Budget on operating profit margin for the full year," Genuit said.

Despite this, the group expects to increase underlying operating margins to above 20% in the medium term, up from 16.4% in 2024.

Revenues totalled £561.3m last year, down 4.3% on 2023, after what chief executive Joe Vorih called a "challenging year for the sector, with ongoing market softness leading to reduced volumes across most segments".

However, after a 10.6% drop in like-for-like revenues in the first half, LFL revenues increased by 0.5% in the second half.

Underlying operating profits fell 2% to £92.2m, as a weaker top line was partially offset by a 40-basis point improvement in the underlying operating margin. This was in line with the company-compiled consensus range of £92m-94m.

The board proposed a total dividend for the year of 12.5p, up from 12.4p paid out in 2023.

"We saw some signs of market stabilisation in the second half of 2024 and market volumes in the early part of this year have been in line with management expectations," Vorih said.

"Our growth prospects remain strong, given the need for investment in UK infrastructure and housing. As a result, we are well-placed to take advantage of a market recovery when it comes, with strong operational gearing and a robust balance sheet enabling us to continue investing in Genuit's long-term success."