Genuit Group PLC (LSE:GEN) shares dropped 13% to 308p on Monday as investors looked past the group’s steady trading update and focused instead on its warning that construction markets will remain subdued into next year.
The building products manufacturer, formerly Polypipe, said revenue rose 7.1% in the four months to October, or 3.7% on a like-for-like basis, reflecting continued market share gains even as demand softened ahead of the UK Government’s November Budget.
Full-year underlying operating profit is now expected to land between £92 million and £95 million, trimmed from earlier hopes due to weaker volumes.
Margins are still set to improve in the second half, helped by price increases, productivity gains and cost efficiencies delivered through the Genuit Business System.
The group highlighted strong progress in ventilation, water management and sustainable building products, as well as early momentum from September’s acquisitions of Monodraught and Davidson Holdings, which are expected to add £13 million of fourth-quarter revenue.
Chief executive Joe Vorih said the performance was “resilient” despite “persistently challenging” conditions and noted that the company is well placed to benefit when construction activity eventually recovers.
Robust cash generation and a strengthened balance sheet leave room for further disciplined acquisitions.
Still, with uncertainty around the Budget, higher national insurance costs and muted economic sentiment weighing on customers’ purchasing decisions, investors appear unconvinced for now.
The share price reaction suggests the market is bracing for a longer period of sluggish demand, even as Genuit continues to outperform weaker rivals.