Thursday 21 September 2017

Revenues surge to €2.4bn at Woodies' Grafton Group parent

‘The Irish and Netherlands businesses performed well’ and are well positioned to take advantage of the economic recovery, said Grafton ceo Gavin Slark
‘The Irish and Netherlands businesses performed well’ and are well positioned to take advantage of the economic recovery, said Grafton ceo Gavin Slark
Colm Kelpie

Colm Kelpie

Building materials firm Grafton Group has recorded a surge in revenue of 12.8pc in the year to the end of October with continued good performance from its Irish operation.

Group revenue hit £2.11bn (€2.41bn).

The parent company of Woodies said the DIY chain has continued to generate good like-for-like growth in Ireland, benefiting from gains in employment, disposable incomes and a positive response from customers to the "re-focusing" of the business in recent years.

Analysts said the recent performance of the group was "reassuring".

"While just one period, and admittedly in advance of the real volume and pricing challenges to come, its performance in the closely watched UK merchanting sector is better than we had expected," said Michael Mitchell, analyst at Davy Stockbrokers.

"It is also likely ahead of other peers in the sector. In that context, the strong performance of its other operations, most notably Ireland, is all the more apparent."

Like-for-like revenue increased modestly in the four months to the end of October in the UK Merchanting business.

Gavin Slark, Grafton ceo, said the group had a "satisfactory" performance in the period, with development activity focused on expansion of the Group's Selco branch network in the UK

"The Irish and Netherlands businesses performed well and are attractively positioned to benefit from a relatively early stage recovery in the economic cycle and underpin the benefits to the Group of exposure to multiple markets," he said.

In August, operating profit at Grafton Group soared by 18pc in the first half of the year as the company's Irish presence performed strongly.

Grafton posted an operating profit of £64.8m (€74.2m) on revenues of £1.23bn (€1.40bn), up 13pc on the same period last year.

Earnings per share at the firm increased by 10pc to 22.3p as the dividend settled on by the firm increased by 6pc to 4.75p.

Net debt at the company rose by £44.6m (€51.09m) to £95.7m (€109.6m).

Robert Eason, analyst at Goodbody Stockbrokers, said its profit forecasts are being left unchanged for now on the back of Grafton's reported 2.8pc sales growth, which was better than expected.

"The recent update from Grafton Group again demonstrates its differentiating factors, namely strong growth in Ireland and the Netherlands, which both have a healthy macro backdrop, and the ongoing successful rollout of the Selco model in the UK," Mr Eason said.

"In terms of currency, the group is also a beneficiary of a weaker sterling from a translation perspective.

"It is these factors that continue to underpin our preference for Grafton Group (Buy)."

Irish Independent

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