Wednesday 19 September 2018

Grafton gets warm weather boost as first-half revenue hits £1.45bn

Grafton CEO Gavin Slark said Woodie’s got biggest benefit from the recent spell of hot weather.
Grafton CEO Gavin Slark said Woodie’s got biggest benefit from the recent spell of hot weather.
John Mulligan

John Mulligan

The hot weather has given builders merchanting group Grafton a significant boost, with average daily revenue growth at its Woodie's DIY chain soaring almost 26pc in the two months to the end of June.

Chief executive Gavin Slark said that while the group was pleased with first-half trading, the overall performance had been heavily influenced by the weather.

"The very cold conditions experienced in March and April have been followed by a hot and dry May and June which has benefited a number of businesses, particularly Woodie's," he said.

Woodie's is just a small part of the builders merchanting group's business.

The group's revenue rose 8.6pc to £1.45bn (€1.63bn) in the first six months of the year. On a constant currency basis, it was 7.9pc higher. Like-for-like group revenue rose 3.8pc.

In the UK, daily like-for-like revenue growth in the two months to the end of June was 5.8pc, and 1.8pc in the first six months of the year.

Mr Slark added that Grafton's growth in the UK during the first six months of 2018 was influenced by the store-opening programme for its Selco chain, and the acquisition of London-based specialist decorator merchant Leyland SDM in February.

Grafton agreed to pay £82.4m (€93m) to buy Leyland SDM. The business operates 21 outlets in central London, and generated sales last year of £47.8m.

"Our businesses in Ireland and the Netherlands continue to perform well," said Mr Slark.

"We enter the second half well placed to deliver our expectations for the financial year."

Grafton's merchanting revenue in Ireland, where it owns the Heiton Buckley and Chadwicks chains, rose 7.6pc in constant currency terms in the first half of the year.

In the UK, merchanting sales were 6.7pc higher in the period.

In the Netherlands, Grafton's revenue in the first six months of the year was up 18.8pc, and in Belgium it was 2.9pc lower.

"While we will likely wait to see its first-half profitability (and July/August trading) before making meaningful changes to forecasts, there is now clearly an upward bias to both our and consensus expectations," said analysts at Davy Stockbrokers in a note circulated after the trading update.

Davy added that with £1.45bn first-half revenues now booked, the broker's own current forecasts imply the group must increase second-half revenues by just 5.8pc, to £1.45bn, to meet estimates.

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