Business Irish

Sunday 20 October 2019

Grafton Group sells UK plumbing firm

Positive outcome: Grafton Group CEO Gavin Slark. Photo: El Keegan
Positive outcome: Grafton Group CEO Gavin Slark. Photo: El Keegan
Ellie Donnelly

Ellie Donnelly

Builders merchant the Grafton Group has sold its specialist UK plumbing and heating business, Plumbase, for £66.75m (€74.9m) to Plumbing and Heating Investments.

Taking into account adjustments, the Woodie's owner received net cash proceeds of £60.7m.

The company said the disposal was in line with its strategy of moving towards higher-returning businesses "with good long-term growth prospects".

Gavin Slark, chief executive of Grafton Group, said: "This transaction represents a very positive outcome for Grafton and enables us to continue to focus our capital and resources on attractive growth opportunities that generate appropriate returns for our shareholders."

Plumbase generated sales of £257.8m and operating profit of £6m (€6.7m) for the year ended 31 December 2018.

Flor O'Donoghue, analyst at Davy Stockbrokers, said the transaction was "wholly consistent" with the company's strategy of acquiring higher margin business and selling lower margin and return operations.

"The sale of Plumbase, operating in the structurally low margin, low growth UK plumbing and heating sector, is wholly consistent with this strategy," Mr O'Donoghue said.

So far this year shares in Grafton, which also owns Chadwicks and Heiton Buckley in Ireland, are up 18pc.

Yesterday, the share price traded at 762.5 pence in London, having traded as high as 937 pence in May.

Last year Grafton, which was founded in 1909, reported revenue of £2.95bn and adjusted operating profit of £194.5m.

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