Grafton profits surge by 7pc as group revenues hit €1.8bn
Shares in builders' merchant and DIY specialist group Grafton closed up 6.1pc yesterday after the company said operating profit for the first half of the year rose by more than a fifth.
The Woodies DIY and Atlantic Homecare owner said revenue jumped 7pc to £1.08bn (€1.48bn), while the company posted a 21pc rise in operating profit.
Profit before tax surged 26pc to £57.9m. And it said the merchanting business in Ireland reported a significant increase in revenue and operating profit, as the pace of growth in the construction sector accelerated. Analysts described the results as impressive.
"Earnings growth of over 30pc in H1 was 14pc better than we expected," said Flor O'Donoghue, analyst with Davy Stockbrokers.
"Hence fears that the group's momentum was faltering look overdone. In addition, the group has the support of a very strong financial position with net debt at extremely low levels."
London-listed Grafton closed up 6.1pc in London trading.
The share price is up close to 12pc year-to-date. Davy said the stock has pulled back a considerable amount since the start of the quarter.
"This leaves it keenly valued and we expect a positive reaction to the results," Ms O'Donoghue said. Grafton said the pace of growth in the construction market accelerated and extended into the commercial property and civil engineering sectors in the third quarter of the year.
Grafton chief executive Gavin Slark said the company had recorded 15pc like-for-like growth in the Irish builders merchanting market.
"From a group perspective, the fact that we can now say that the Irish recovery is established... then you would say that there is a level of growth in Ireland that is now sustainable. The fact that profitability in Ireland has come back is a huge boost to the group."
He said while the recovery is clear in Dublin, Cork is also performing strongly, as is Galway.
"If there's one area of the country where it seems to be lagging is the midlands. It's a difficult one, but I think part of it is just to do with population and activity."