Genuit Pre-Tax Profit Halves as Revenue Falls

GENUIT GROUP PLC reports pre-tax profit almost halving with a 48.5% drop, as revenue fell by 10.6% despite maintaining its operating margin, in the six months ending 30 June 2024.

Genuit Group, UK provider of water, climate and ventilation solutions for the built environment, expects underlying operating profit of between £92.1m and £96.0m for FY24.

Joe Vorih, Chief Executive Officer, said: “Whilst the market remains subdued in 2024, the Group demonstrated continued operating margin improvement in the first half over prior year, as the benefits of our strategic actions continue.

“I’m particularly pleased at the momentum building in the embedding of the Genuit Business System through our businesses. I’m also delighted to welcome new colleagues from our two recent acquisitions into the Group as we advance our Sustainable Solutions for Growth strategy.

“As we look forward into the second half, we currently anticipate these market conditions to remain, offset by continued operational and strategic progress. We continue to expect full year underlying operating profit to be within the range of analyst forecasts.

“The Genuit Group is exceptionally well positioned to benefit from eventual market recovery, with business simplification complete, at least 20% available capacity to ramp production and improved operational gearing providing confidence in medium term targets.”

Genuit Pre-Tax Profit Halves

A ‘subdued market’ is blamed for Genuit’s fall in pre-tax profit and revenue. The company has attempted to offset this with a business simplification programme, cost management and emerging operating efficiencies.

Divisions within the business have performed variously. Climate Management Solutions underlying operating margin rose to 15.1% while boiler market sales at Adey fell, partially offset by growth in residential ventilation sales at Nuaire/Domus.

Green Roofs

Genuit’s acquisition of Sky Garden in August 2024 for £2.5m secured additional annual revenues of c.£7m. Providing design, supply, installation and maintenance services for green and bio-solar roofs, podium decks and green walls, the business will join WMS and extend the Group’s blue green roof offering. It complements Permavoid’s geo-cellular roofing solutions business and creates synergies with Keytec’s water management installation business.

Also in August 2024, the £2.7m acquisition of underfloor heating business Omnie & Timoleon is expected to generate annual revenues of c.£8m. The Water Management Solutions underlying operating margin was at 10.0%, whilst revenue decreased by 11.4% year-on-year, impacted by wet weather and delayed project starts.

Sustainable Building Solutions (SBS) underlying operating margin increased to 21.1% while revenue decreased by 12.6% year-on-year, driven by lower market volumes.

Several projects secured with Modern Methods of Construction (MMC) manufacturers of pods and volumetric modules, are scheduled for delivery in the second half of the year. These low labour solutions are expected to be a growth sector within commercial construction.

The company has implemented its lean operational strategy, Genuit Business System, introducing workforce kaizen training events for 400 Genuit employees.

Outlook

Genuit expects the market to remain subdued during the second half of 2024. It cites a backdrop of low newbuild volumes, a softer commercial construction sector and an RMI market waiting for interest rate reductions. Despite this, the Board expects underlying operating profit to remain in the range of analyst forecasts.

The company says it is well positioned for market recovery, with at least 20% available capacity within its current operational footprint.

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