Woodies DIY giant builds up revenues to a record €2.8bn
Published 09/03/2016 | 02:30
Woodies DIY owner Grafton Group generated record revenues of £2.2bn (€2.8bn) last year as its UK operations performed well and it benefited from a continuing improvement in the Irish economy.
Its trading profit rose 15pc to £126.8m (€163.6m).
At its Irish merchanting businesses, which operates under the Chadwicks and Heiton Buckley brands, revenue was 10.9pc higher at €354.5m, while operating profits jumped 25.7pc to €25.6m.
Following translation to sterling, which Grafton now reports its figures in, revenue was marginally lower, while operating profit was up 13.2pc.
Grafton chief financial officer David Arnold told investors that the Irish market remains competitive for the merchanting business, which is partly a function of the improving economy.
"The market did start very competitively [last year]. The teams worked really hard on gross margin in each branch," Mr Arnold said.
"It was a really diligent focus on any number of 15 to 20 very modest improvement measures, which all contributed in a totality to an improvement overall in the gross margin in the Irish merchanting business."
But he said there will be a drag on the gross margin in the business as housebuilding activity here eventually resumes a normalised pace.
Grafton Group operates the Woodies DIY and Atlantic Homecare chains in Ireland, where it said euro-based operating profit soared rose 62.2pc to €4.8m. Revenue in euro terms rose 4.4pc to €205.1m.
The Woodies operation is headed by David Ronayne, former head of the Dixons, PC World and Currys business in Ireland. Grafton has been revamping some outlets, and said the changes have been well received by customers. Grafton noted that the improvement in consumer sentiment in Ireland that's been evident in recent years continued at a steady rate during 2015.
However, it conceded that the pace and stage of the recovery was more advanced in and around Dublin and provincial cities than elsewhere.
Grafton's UK merchanting business, which accounts for 75pc of group revenue, remains robust, according to chief executive Gavin Slark, despite a softer second half in 2015. Revenue at the division, which trades under businesses including BuildBase, Plumbase and Selco, rose 8.9pc to £1.66bn, while operating profit was 13.8pc higher at £105.6m.
"I do think, fundamentally, the underlying market is robust in the UK, both in terms of construction, house building and the repair, maintenance and improvement side," he said.
Mr Slark, inset, also said yesterday that it's not possible at this stage to determine what the likely impact of a possible Brexit could be following the June referendum in the UK.
He also told investors that Grafton has no plans to divest its mortar manufacturing business, which he conceded is arguably non-core to the merchanting arm.
Revenue at the mortars business, which has eight plants in England and one in Scotland, rose 9.8pc to £49.6m last year, and total operating profit in the segment rose 23.3pc to £9.7m.
"It's a great business. It's got a very high operating margin, is very cash generative and if you look at the metrics in term of return on capital employed, and operating margin, that if we did divest of that business, you'd have to work really hard in merchanting terms to get something that brought the same metrics into the group," he said.