Our view Q3 trading was relatively resilient in terms of total sales (+10.7%), boosted by strong pricing, but full year 2022 consensus operating profit looks likely to edge lower by c.2-3% against a weakening volume backdrop. While volumes are weaker, pricing has been better and seems to have been successfully passed on. The market’s focus is on next year, and the weaker volume backdrop, particularly against an easier comparative in Q3, is not an encouraging trend into 2023 even with pricing looking likely to remain at elevated levels next year. Q3 trading update summary Today’s Q3 trading update points to a weakening volume backdrop, but stronger pricing. Total Group sales in Q3 were up by 10.7% (volume down by 5.6% and pricing up by 16.3%) with LFL sales up by 7.4%. Merchanting saw total sales growth of 11.5% (volumes down by 6% and pricing +17.5%) with LFL growth of 8.7% (which implies an estimated LFL volume fall of .c9%) with trading consistent throughout the period. Smaller RM&I project demand was weaker, with the larger projects and Specialist Merchanting trading better. Toolstation saw total sales growth of 6.1% (volume down by 3.4% and pricing up 9.5%), with LFL growth of 0.2% (implying LFL volumes down by c.9%). The Group continues to invest in Toolstation with 80 new branches expected in 2022. Outlook comments point to a challenging market backdrop with elevated levels of cost inflation and the Group expects to deliver full year operating profit “around the middle” of the current consensus range. Clearly the volume backdrop has weakened in Q3, and this is against an easier comparative than Q2. Valuation The shares are down by c.50% YTD and reside on FY23E PE and EV:Sales multiples of c.9 times and 0.5 times respectively.