Grafton rises as outlook 'starts to improve'
Grafton rose the most in four months in Dublin trading as the country’s biggest builders’ merchant said the trading outlook is starting to improve.
Sales in the second half of 2009 were similar to the first half of the year, boosting profitability, the company said today in a statement.
Grafton climbed as much as 9.4pc, the biggest intraday percentage gain since October 29, Bloomberg data shows.
The trading outlook is “beginning to improve following a period of significant uncertainty,” Grafton said in the statement.
The UK, which accounts for about 60pc of Grafton’s sales, is recovering from a housing slump that sapped demand for the company’s brick, tile and plumbing products.
Net income declined 77pc to €13.4m during 2009, the statement shows.
“The return to profitability in the second half has been a lot more marked than our expectations,” analyst Robert Eason at Goodbody Stockbrokers in Dublin said in a research note. Eason raised his rating on the stock to “buy” from “add.”
While sales halved in the first two weeks of January due to cold weather, sales since then have been “close to expectations,” Executive Chairman Michael Chadwick said in an interview.
Sales fell 26pc to €1.98bn during 2009, matching the €1.98bn median of three estimates compiled by Bloomberg.
The company has cut jobs as part of a drive to revive sales and profit. Grafton carried out the bulk of the cost-cutting in the last two years, and is continuing to keep expenditure “under review,” Chadwick said.
Grafton rose as much as 23 cents to €2.68 in Dublin and traded at €2.60 at 8:24am.