Grafton sees small rise in operating profit despite slow activity
Like-for-like revenue down 8.7pc
Woodies DIY and Atlantic Homecare owner Grafton Group managed to marginally boost its operating profit in the first four months of the year despite poor levels of activity in its core UK and Ireland markets.
Revenue for the four months to the end of April was €677m – flat on the corresponding period in 2012. A less favourable sterling-euro exchange rate also depressed group turnover by €12m.
The company, which held its annual general meeting in Dublin yesterday, said that like-for-like revenue in its Irish retail business – which consists of the two DIY chains – plunged 8.7pc in the first four months of the year.
It blamed the decline on "softening demand" caused by weakness in consumer sentiment and record low temperatures in March and early April, which delayed the start of the outdoor season.
Grafton, headed by chief executive Gavin Slark, had previously said there were signs that the pace of revenue decline at the DIY chains had slowed. Revenue at the Irish retail division fell 8.5pc last year, but the annual rate of decline had eased to 2.7pc between November and December.
But the two businesses form just a small part of the group's activities. It generated about 70pc of its €2.1bn revenue last year and nearly all its profits in the UK, where it operates a range of merchanting businesses but no DIY retail arm.
Average daily like-for-like sterling revenue in Grafton's UK merchanting business, which contributed 74pc of group turnover in the first four months, was marginally higher year-on-year.
Weather conditions reduced volumes in March, it said, but activity levels recovered during April.
In Ireland, merchanting revenue nudged 1pc higher in the first four months.
The company said it was an "encouraging development" and the first period since the first half of 2007 that the unit recorded revenue growth.
It said the unit had benefited from an "improved competitive position".
"While turnover growth in the first two weeks of May has seen some improvement, the group remains cautious about the near-term outlook for its businesses and is looking to a continuing reliance on internal initiatives to improve profitability," added Grafton.
Its shares fell nearly 3pc early yesterday before staging a partial recovery to close down 1.8pc at €5.51.