Building products supplier Genuit (LON:GEN) trimmed its FY26 profit guidance due to the impact of the Middle East conflict on its sales and margins. The firm now sees underlying operating profit towards the lower end of the range of analyst estimates.
Double whammy
Genuit makes pipes and other water management products for the housing market and the infrastructure market. It also makes HVAC (heating and ventilation) products for the housing market, with sales split 70% water and 30% HVAC.
For the first four months of 2026, sales were down 8.7% on a LFL basis but flat on a reported basis at £198 million. Persistent rain in January and February meant significant delays for the construction industry, including new-build housing. The Middle East conflict in March meant there was no respite, and freight and other input costs rose sharply.
The firm responded quickly, agreeing double-digit price increases with customers on affected polymer-based products. It has also increased its delivery charges to allow for increased freight costs, although there is a short time lag.
Although there has been some seasonal uptick, volumes have remained lower than 2025 due to negative sentiment. The firm’s small MIddle East business (3.5% of group sales) inevitably saw a bigger drop in volumes.
Assuming a ‘timely’ resolution to the MIddle East situation and a resumption of demand, the firm sees FY26 operating profit around £95 million. That puts it at the low end of analysts’ estimates but still slightly ahead of FY25’s £94.4 million.
Anyone who looks at the UK construction sector – of for that matter looked out the window in January and February – understands what the weather was like and the impact it had on building activity.
To that extent, it’s no surprise Genuit saw lower demand because everyone involved in the industry was affected. Hostilities kicking off in the Middle East just as the rain stopped was a bitter blow, but again the impact was widespread.
The firm is controlling what it can control, to quote CEO Joe Vorih, and the Genuit Business System continues to deliver benefits. On the plus side, over half the polymer it uses by volume is recycled and inflation hasn’t been as bad.
The group has made a big push into water infrastructure, where large programmes like AMP8 provide long-term revenue visibility. It’s already having success here, with a win rate of over 50% on quotes submitted for works.
Analysts will obviously trim their earnings estimates after today’s update, but they had probably earmarked Genuit for downgrades anyway. The share price reaction suggests investors had also priced in much of today’s news already.
Read the press release here:
https://www.genuitgroup.com/investors/
