Genuit Group H1 Earnings Call Highlights

Genuit Group (LON:GEN) said first-half trading remained challenging amid subdued construction demand, higher polymer costs and uncertainty linked to the Middle East conflict, but maintained its full-year expectations after reported revenue rose 3% and underlying operating profit declined only modestly.

Chief Executive Officer Joe Vorih said the company had responded with “balanced cost and price action,” simplification initiatives and continued investment in growth areas including ventilation, water management and lower-carbon products. He said the group expects its simplification programme to generate more than £4 million in annualised savings, primarily from 2027 onward.

First-half results and cash generation

Chief Financial Officer Tim Pullen reported revenue growth of 3% on a reported basis, supported by acquisitions completed in 2025. On a like-for-like basis, revenue declined about 5%, though this improved from an approximately 8% decline reported in the four months to April.

Underlying operating profit was £43.9 million, down 1.6% from the prior year, while EBIT margin declined by around 70 basis points. Pullen said gross margins remained resilient, reflecting cost control and price management, although results were affected by a lag between polymer cost inflation in March and April and price increases that took effect in May.

• Water represented about 70% of group revenue, while climate represented just under 30%.
• Housebuilding accounted for roughly one-third of revenue, with repair, maintenance and improvement representing nearly another third.
• Non-housing markets, including commercial, civil engineering and infrastructure, contributed about 27% of revenue.
• International operations represented around 10% of revenue.

Cash conversion exceeded 70% in the first half, in line with normal seasonal phasing, and the company remains on track for more than 90% cash conversion for the full year. Net debt was about £190 million, resulting in leverage of 1.6 times, within Genuit’s targeted range of one to two times. The interim dividend was held at 4.2 pence per share.

Climate division affected by Adey issues

Climate division revenue rose 2.4% on a reported basis but fell 8% on a like-for-like basis. Pullen said ventilation had been among the group’s stronger markets, helped by commercial demand, particularly from schools, and residential demand linked to addressing damp and mould in social housing.

That performance was offset by weaker demand in heating-related repair, maintenance and improvement activity. Genuit’s Adey business, which supplies water treatment and filtration products associated with heating systems, faced lower renovation and refurbishment activity during the period.

Adey also incurred two specific first-half issues: a £1.5 million slow-moving stock provision and a supplier issue with an approximately £0.8 million impact, including lost sales and remediation costs. Pullen said both matters had been root-caused and were not expected to recur in the second half.

Vorih said Adey remains a quality, high-market-share business and has products relevant to both boilers and heat pumps. He said hydronic systems require cleaning and protection regardless of the heat source.

Genuit also highlighted progress at Monodraught, the ventilation business acquired in 2025. Orders in the 11 months following the acquisition were up 24% compared with the equivalent pre-acquisition period, according to Vorih. The company has developed an interface box that connects Monodraught hybrid ventilation systems with Nuaire mechanical ventilation equipment, creating a combined offering for schools and other commercial buildings.

The product went on sale in June, with production shipments expected in September. The company received its first orders in July, totaling more than £1 million across two projects.

Water business, Davidson integration and stormwater opportunity

Water division revenue increased about 4% on a reported basis and declined approximately 3% on a like-for-like basis. Genuit cited subdued residential demand and delays in civil engineering and infrastructure projects, which it attributed to weaker business confidence.

However, Manthorpe, Genuit’s Italian business and its Irish operations all grew year over year during the first half. Pullen said the Middle East operation, which experienced direct revenue loss when conflict escalated in March and April, had returned “pretty much” to normal by June.

The water business was particularly exposed to polymer inflation. Pullen said virgin polymer grades had experienced cost increases ranging from 10% to more than 30%, while recycled material costs had risen less sharply. Genuit spent about £80 million on polymers last year, including roughly £50 million on virgin polymer and £30 million on recycled material.

The company introduced double-digit price increases across around 60% of the business. Pullen said costs had stabilized at elevated levels, but the situation remained volatile and could require further management if inflation or deflation emerged.

Genuit is also accelerating the integration of the Davidson acquisition. Two of Davidson’s three sites will be closed and their operations consolidated into larger Genuit facilities by the end of 2026, with no loss of capacity expected. The action is a major contributor to the anticipated £4 million-plus annualised cost savings from 2027.

Vorih pointed to growing opportunity in stormwater management under the AMP8 water investment cycle. The group’s active quote bank in this area rose to £9 million from £2 million a year earlier. Genuit has begun delivering projects, including an order for Yorkshire Water, though Vorih said the opportunity would have a more material impact in 2027.

Regulation and outlook

Management said regulatory and sustainability drivers were moving closer. Vorih highlighted the Future Homes Standard, which requires new housing permits to comply from March 2027, followed by the expiry of the main grace period a year later. He said some larger housebuilders have already begun adopting relevant solutions, including underfloor heating.

Genuit estimates that its revenue opportunity per home could rise from approximately £800 to £1,200 for conventional plastic plumbing to between two and three times that amount, and potentially as much as five times in configurations using products such as underfloor heating, mechanical ventilation with heat recovery, filtration and wastewater heat recovery.

The group also cited school rebuilding standards, Awaab’s Law, water-sector investment and increasing demand for Environmental Product Declarations. More than 60% of Genuit revenue is now covered by such declarations, according to Vorih, and the company aims to exceed 80% coverage.

Looking ahead, Genuit expects market conditions to remain difficult through the rest of 2026. However, it expects second-half margins to benefit from the full impact of pricing actions, the absence of the Adey operational issues and productivity gains. Management confirmed that full-year expectations remain unchanged.

About Genuit Group (LON:GEN)

Genuit Group plc is the UK's largest provider of sustainable water, climate and ventilation products for the built environment. Genuit's solutions allow customers to mitigate and adapt to the effects of climate change and meet evolving sustainability regulations and targets. The Group is divided into three Business Units, each of which addresses specific challenges in the built environment: - Climate Management Solutions - Addressing the drivers for low carbon heating and cooling, and clean and healthy air ventilation.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].

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