Grafton in 8pc slump as its key markets disappoint
Profit warning issued by the owner of Woodies DIY and Atlantic Homecare
Shares in building materials firm Grafton Group slumped as much as 8pc yesterday in Dublin after the owner of Woodies DIY and Atlantic Homecare warned investors that full-year profits are now likely to be well below analyst expectations due to ongoing difficulties in its key UK and Ireland markets.
It also cautioned that the economic environment in Ireland is likely to make trading conditions "challenging for some time ahead".
Davy Stockbrokers had been expecting Grafton to post operating profits just shy of €60m for the current year. Grafton said profits would now probably be between €52m and €55m.
In an interim management statement released by the group yesterday, Grafton said that revenue for the 10 months to the end of October was up 1.7pc at €1.73bn.
In the UK, where it generates 70pc of turnover, sterling-denominated revenue rose 4.8pc in the same period, but the pace of growth moderated significantly during September and October. The company also has a joint venture in Belgium.
The rate of revenue decline at its DIY retail and merchanting outlets in Ireland also accelerated during the 10-month period. Grafton owns outlets here such as Heiton Buckley and Chadwicks.
Turnover declined 5.7pc at the Woodies and Atlantic Homecare outlets in the 10 months to the end of October, having fallen 4.6pc in the first half of the year.
At the merchanting businesses in Ireland, turnover fell 7.7pc in the 10-month period compared to a 7.2pc decline in the first half of the year.
The result is a significant disappointment for Grafton, which in May told shareholders that turnover had risen 4.6pc in its Irish retail business in the four months to the end of April, while the pace of overall revenue decline here had moderated in the period to 2.6pc.
In the UK, average daily sterling denominated sales rose 4pc on a like-for-like basis, but the growth had moderated to just 2pc during September and October.
Shares in Grafton ended the trading session in Dublin down 15 cent, or 2.58pc, at €2.60.