Lords Group Trading plc (LSE:LORD) has revised its full-year earnings outlook, forecasting adjusted EBITDA of approximately £16 million for 2026 as difficult trading conditions in its Plumbing and Heating division continue to weigh on performance.
The building materials distributor also confirmed amendments to its existing banking facilities, introducing revised financial covenants designed to support the group’s requirements through March 2029.
In a trading update covering the four months ended October 31, 2026, Lords reported continued growth in its Digital business and an improving trend in Merchanting, although weaker demand for plumbing and heating products affected overall revenue.
Group like-for-like revenue declined 3.1% during the four-month period, while total revenue fell 2.8%. For the first ten months of 2026, like-for-like revenue decreased 5.2%, with total revenue down 0.5%.
Digital Growth Continues as Merchanting Performance Improves
Lords’ Digital division delivered like-for-like revenue growth of 11.8% during the four months to October, supported by market share gains despite challenging industry conditions.
For the ten-month period, Digital like-for-like revenue increased 15.3%.
Merchanting recorded modest like-for-like growth of 0.5% during the four months, although revenue remained 2.4% lower over the first ten months of the year.
The division continued to face competitive pricing pressures, subdued volumes and supplier cost inflation, limiting its ability to pass higher input costs on to customers.
Restructuring measures implemented in August are expected to generate annualised savings of £1.6 million, supporting future operating efficiency.
Plumbing and Heating Revenue Falls 11.1%
The Plumbing and Heating division remained under pressure, with like-for-like revenue declining 11.1% during the four-month period and 12.5% over the first ten months of 2026.
The company attributed the weakness to subdued repair, maintenance and improvement activity, alongside continued pressure on household spending.
Within the division, wholesale business APP prioritised gross margins over sales volumes, resulting in lower revenue but improved margins.
The previously announced consolidation of APP’s distribution network from seven centres to four is expected to deliver approximately £1.5 million in annualised cost savings.
Other parts of the division performed more positively. The DH&P and HRP spares and trade counter businesses recorded combined revenue growth of 11.5% during the period, while renewables revenue more than doubled.
Banking Amendments Completed to Support Financial Position
Lords confirmed that amendments to its existing banking covenant arrangements have been completed, following discussions with its lending banks.
The revised package introduces quarterly covenant testing thresholds intended to provide financial flexibility while the group focuses on cash generation and reducing leverage.
The arrangements include a group leverage threshold of 3.0 times bank-calculated adjusted EBITDA from March 31, 2028, onwards.
Lords has also agreed not to pay dividends while group leverage remains above 3.5 times bank-calculated adjusted EBITDA.
The company said the revised banking arrangements would support its efforts to strengthen the balance sheet and manage its financial commitments.
Market Recovery Now Expected Later in 2027
Lords said current interest rate expectations and continued weakness in the Plumbing and Heating market had prompted the board to delay its anticipated timetable for a recovery in demand.
The company now expects trading conditions to improve later in the 2027 financial year than previously forecast.
Chief Executive Shanker Patel welcomed the completion of the banking amendments and highlighted the performance of Digital, improving Merchanting trends and growth in specialist operations.
He said the group’s priorities remained improving profitability, generating cash and strengthening its financial position.
Lords expects restructuring savings and operational improvements to support profitability when market conditions recover, while maintaining its focus on cost control and protecting margins.
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