MRO products giant Grainger — No. 1 on Industrial Distribution's Big 50 List — reported its 2020 fourth quarter and full-year financial results on Wednesday, and the figures point to continued sequential and year-over-year improvement for not just the company, but the industrial products market as a whole.
Lake Forest, IL-based Grainger posted total Q4 sales of $2.94 billion, up 3.3 percent year-over-year (YoY), with organic sales up 5.6 percent. That outperformed Q3's year-over-year gains of 2.4 percent overall and 4.6 percent for organic. Organic sales exclude Grainger's recent divestments of its Fabory (U.K.) and Grainger China businesses.
Grainger had a Q4 gross profit of $1.03 billion and a gross profit margin of 34.9 percent, compared to 38.0 percent a year earlier. The company's Q4 operating profit of $275 million was up 52 percent YoY, largely due to lapping 2019's write-down of assets from the acquired Cromwell (U.K.) business. Q4 operating margin of 9.4 percent was up 300 basis points YoY. Q4 total profit of $168 million was up from $103 million of a year earlier and down from $240 million in Q3.
For the full year, Grainger's 2020 total sales of $11.80 billion were up 2.7 percent from 2019, with organic sales up 3.5 percent. Gross profit of $4.24 billion was down approximately 4 percent, with gross profit margin of 35.9 percent down 235 basis points. Operating profit of $1.02 billion was down 19 percent from 2019, primarily due to charges in the first half of 2020 related to the divested Fabory business. Those charges also hindered operating margin that was down 235 basis points to 8.6 percent. Adjusted operating profit of $1.3 billion was down 4 percent, with adjusted operating margin of 11.2 percent down 80 basis points. Total 2020 profit of $694 million was down 18 percent from 2019, while adjusted profit of $877 million was down 6 percent.
"In both the full-year and fourth quarter 2020, despite the challenges of the pandemic, we delivered solid top-line growth by gaining significant share in the U.S. and delivering impressive growth in our endless assortment businesses," said DG Macpherson, Grainger chairman and CEO. "In addition, we managed SG&A spending below the prior year while continuing to generate significant operating cash flow. In 2020, we demonstrated our ability to deliver in tough economic times and expect business performance will improve sequentially as the virus subsides throughout the year. We remain confident in our strategy and excited about 2021 and beyond."
On Jan. 12, Grainger announced that Dee Merriweather was promoted from president of North American sales and services to the role of the company's chief financial officer — a position previous vacated when Thomas Okray left Grainger to take the same position at Eaton.
Alongside that announcement, Grainger said that it was merging all commercial functions for the Grainger brand in North America into a single organization — the Grainger Business Unit. The new structure is aimed to help drive profitable share gain and customer solutions across geographies. Paige Robbins was promoted from chief technology, merchandising, marketing and strategy officer to president of the Grainger Business Unit.
