Grafton reports improved sales as 'green shoots' filter through from UK economy
Published 07/01/2010 | 05:00
Sales at building materials group Grafton delivered further evidence that the business is stabilising during the second half of 2009, the company said yesterday.
The company said "green shoots" in the UK economy were beginning to filter through to its merchant depots .
In a trading update for 2009 released yesterday, Grafton said that group turnover to the end of December was roughly €1.98bn, down 26pc, or €690m, on the €2.67bn in revenue achieved in 2008. It added that sales in the second half of the year were "similar" to those achieved in the first six months of 2009.
Grafton owns businesses in Ireland such as Woodies DIY and Atlantic Homecare, as well as Chadwicks.
In the UK, it operates units including Plumbase, Buildbase and Euromix. Its UK operations typically account for about two-thirds of group turnover and two-thirds of operating profit.
Grafton said that on a constant-currency basis, UK sales were down 7pc in the second half of the year compared to an 18pc decline in the first half.
It added in its statement that trading conditions in the UK market remained challenging, but that improved indicators there, including increased mortgage lending, more housing transactions and house building, and some house-price inflation, were being reflected in "improving sales" across its UK operations.
In Ireland, it said like-for-like sales in the second half were down 32pc compared to a 37pc decline in the first half of the year.
Davy Stockbrokers analyst Flor O'Donoghue described the trading update from Grafton as "reasonably encouraging", adding that the broker's own 2010 revenue estimate of €1.9bn for the company might now be a "little light". However, he added that he does not expect to make any material adjustments to his 2010 forecasts.NCB analyst Tommy Conway said the €1.98bn revenue figure for 2009 was behind his forecast of €2bn.
The broker is forecasting group earnings before interest and tax at Grafton of €33m in 2010, comprising a loss of €3m in Ireland and a profit of €36m in the UK.
Shares in Grafton closed up 1.9pc, or 6c, at €3.20 yesterday.