Grafton shares jump 5pc ahead of expected €67m profit
SHARES in merchanting group Grafton jumped after the company said it expects to deliver full-year operating profit at the higher end of market expectations. The stock rose more than 5pc in Dublin, closing up 17 cent at €3.55.
Grafton is likely to deliver an operating profit in the region of €67m for the current financial year.
The company said revenue in the first 10 months of the year climbed to €1.83bn from €1.73bn in the corresponding period last year.
But it added that the translation of sterling revenue, which accounted for 76pc of group revenue in the period, at a more favourable exchange rate to the euro accounted for all of the increase.
Grafton is effectively hunkered down until it sees signs of improving economic conditions in Ireland and the UK. It has significantly pared its cost base over the past few years and said yesterday it has a "good platform" to improve profitability as markets recover from cyclical lows.
The company, which is headed by chief executive Gavin Slark, said sterling turnover at its UK merchanting arm rose 3.6pc in the 10 months to the end of October.
"Trading in September and October saw average daily like-for-like sterling turnover up by 2pc compared to a flat outcome for July and August," it said.
In Ireland, merchanting turnover fell 8.7pc in the period.
Grafton's retail business in Ireland, which includes Woodies and Atlantic Homecare DIY stores, continued to suffer. Turnover at the division slumped 10.1pc in the year to the end of October.
"The rate of decline eased in the July to October period to 6.5pc from 12.4pc in the first half, when demand for seasonal products was, as expected, less affected by adverse weather conditions," said Grafton.
Its four Atlantic Homecare businesses and nine Woodies stores were placed in examinership during the summer as Grafton sought to improve lease terms on a number of units. Another 27 Woodies outlets weren't part of that process.
Davy Stockbrokers said Grafton's update was positive, despite the unfavourable operating backdrop.