Genuit Group — Focus on productivity and growth in FY25

Genuit Group (LSE: GEN)

Last close As at 25/03/2025

GBP3.73

−2.00 (−0.53%)

Market capitalisation

GBP929m

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Research: Industrials

Genuit Group — Focus on productivity and growth in FY25

Genuit’s (GEN’s) FY24 revenue declined by 4.3% y-o-y to £561.3m due to subdued demand. However, market conditions stabilised in H224 with a 0.5% y-o-y revenue decline versus a 10.6% decline in H124. Reported operating profit decreased by 4.5% y-o-y to £59.2m, while underlying profit margin increased 40bp y-o-y to 16.4%, driven by productivity gains through the company’s Genuit Business System (GBS) and purchasing savings. Increased focus on working capital improvements resulted in underlying operating cash generation of £91.6m, representing 99.3% cash conversion on a post-capex basis. GEN further strengthened its balance sheet, reducing net debt/EBITDA to 0.9x (FY23: 1.1x). Underlying EPS decreased to 24.6p (FY23: 25.2p) due to lower operating profit and annualisation of the higher UK tax rate, while DPS increased to 12.5p (12.4p).

Written by

Andrew Keen

Managing director, head of content, energy and resources, industrials

Industrials

QuickView

25 March 2025

Price 374.50p
Market cap £933m
Price Performance
Share details
Code GEN
Listing LSE

Shares in issue

249.2m

Net cash/(debt) excluding lease liabilities at 31 December 2024

£(102.9)m

Business description

Genuit Group is a UK-listed business that focuses on creating a more sustainable built environment by providing water, climate and ventilation management solutions.

Bull points

  • Approximately 20–30% capacity to benefit from improvements in market conditions.
  • Signs of improving market conditions regarding policies (eg Future Homes Standard).
  • Opportunity to grow its c 20% share of £3bn UK-served addressable market.

Bear points

  • Impact of National Insurance and National Minimum Wage changes create £5m headwind in 2025.
  • Progress of UK government policies slower than expected.
  • Potential delays in infrastructure/housing project developments.

Analysts

Andrew Keen
+44 (0)20 3077 5700
Harry Kilby
+44 (0)20 3077 5700

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Growth from sustainability-driven markets

GEN completed two acquisitions in 2024 (Sky Garden, and Omnie and Timoleon). Both were vertically integrated into existing business operations, expanding its solution offerings. Management stated its focus is on growth in 2025, with the strong balance sheet providing strategic optionality for further investment through organic and inorganic growth opportunities. GEN continues to expand its M&A pipeline, in line with its growth ambitions. Management stated that international acquisitions and attractive opportunities in the UK will have an equally important role in strengthening GEN’s market footprint. Capex was £26m in FY24 and management has guided to FY25 capex of £30–35m, further confirming GEN’s ambition of sustained growth.

Outlook: Well positioned for market upturn

GEN is well positioned to benefit from structural growth drivers in FY25, as the UK government reinforces its commitment and policies to address the housing shortage, combined with evidence that the sector is beginning to mobilise for the Future Homes Standard 2025. As it has c 20–30% of additional capacity readily available, GEN will capitalise on improving market conditions. Management reported that 2025 trading began in line with expectations and expects to achieve a medium-term 20% operating profit margin through GBS productivity gains and operational leverage.

Valuation: 6% discount to peers

GEN currently trades on P/Es of 14.5x in FY25e and 13.0x in FY26e, representing a c 6% discount to relevant peers in both years. We believe it looks relatively well positioned to execute on organic and inorganic growth given the strength of its balance sheet.

Source: LSEG Data & Analytics. Note: FY25e EBIT is company complied consensus.

Consensus estimates

Year end Revenue (£m) EBIT (£m) PBT (£m) EPS (p) DPS (p) P/E (x) Yield (%)
12/23 586.5 94.1 80.5 25.10 12.40 14.9 3.3
12/24 561.3 92.2 79.3 24.30 12.50 15.4 3.3
12/25e 584.2 95.7 80.0 25.80 12.60 14.5 3.4
12/26e 613.7 99.0 89.6 28.80 13.20 13.0 3.5

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