Our view Results are a c.3% miss at the operating profit level on weaker than expected Q4 trading in Merchanting. While Q4 was weaker than expected, overall Merchanting took market share and delivered a relatively good outcome for the full year. Toolstation was loss-making, as expected. The Group is proactively taking out costs as it expects significantly weaker volumes in 2023. With price inflation offsetting the expected fall in volume and c.£25m of cost savings, it expects 2023 profits to be in line with market expectations. Cleary the expected weak markets has been reflected in the share price for a while and although the shares are up strongly YTD, valuation sits at a discount relative to peers. 2022 results summary The 2022 results are a c.3% miss at the underlying operating profit level. It seems that Merchanting was weaker than we expected in Q4. Adjusted Group operating profit of £285m, excluding property and a £15m restructuring charge, compared to a consensus estimate of c.£294m. Group revenue was up by 8.9% to c.£4,995m, with LFL growth of 6.6%. Divisionally, Merchanting, despite delivering well for the full year and taking share, saw slightly weaker than expected trading in Q4; Merchanting adjusted profit of £329m (with an operating margin of 7.8%) was c.£10m lower than we expected. Toolstation delivered an operating loss of £9m (UK profit of £21m) as expected, driven by the c.£30m loss in Europe. Adjusted EPS fell by 12% to 94.6p and the DPS of 39p was 1p better than expected. Covenant net debt was a bit better than expected, with leverage (IFRS16) of 1.8 times in line. Outlook comments point to a mid-to-high single digit percentage decline in volumes in 2023, but with mid-to-high single digit price inflation. Supported by cost savings of c.£25m from restructuring including closing c.20 branches, the Group expects to deliver 2023 profits in line with current market expectations. Capex is being cut for 2023. Valuation Shares are up by c.18% YTD and reside on a FY23E PE of c.11.5 times and an EV Sales multiple of c.0.60 times.