Monday 18 December 2017

Grafton won't be panic-buying in Europe, says new boss

John Mulligan

John Mulligan

Grafton Group remains on the hunt for acquisitions in Europe, but chief executive Gavin Slark says there's "no panic" for the company to get its chequebook out.

In an interview with the Irish Independent today – his first since being appointed CEO at Grafton last year – Mr Slark said finding value was key for the group, which in Ireland owns the Woodies and Atlantic Homecare DIY chains.

"We are looking at different European territories," he said. "But the Grafton Group has worked very hard since 2007 to keep a very strong financial base and the one thing that we're not going to do is make any rash decisions that will fundamentally weaken that.

"Although we are able to invest and are willing to invest, we will only do it if we believe we can find real value."

The company generates about 75pc of its €2bn in annual revenue in the UK, and the bulk of the remainder in Ireland. It also has a small presence in Poland and Belgium.

"We have been able to find real value in Belgium," he said. "There are other European territories that we would be interested in expanding into, predominantly in western Europe, but there's no panic for us to do it. There's plenty that we can do to improve the business we have."

He declined to say how much financial firepower Grafton might roll out for acquisitions.

"I don't want to put a spending target out there, but if we find the right business at the right price that brings the right value, the purchase price of that business is not going to be a hurdle to us."

He said the UK, where Grafton is the third-biggest builder merchanting firm with about a 10pc market share, remains its primary focus. He also said that the company has a "strong future" as an independent public company.

"About a third of the UK market is still with independently-owned builders' merchants," he explained. "We still see significant opportunity for us to improve our market share in the UK. It has to be driven by improving market share in profitable businesses. There's no desire for us just to have higher turnover. It's got to be driven by profit and it's got to be driven by cash."

"You can't build a long-term business plan for a group just waiting for an Irish recovery," said Mr Slark. "There's an awful lot of focus on what we're doing in the UK and improving profitability there." He added that improving consumer confidence in Ireland was essential to getting people spending again.

Mr Slark said that despite generating the bulk of its revenue and profits abroad, there was "absolutely no pressure" on Grafton to shift its primary listing to the UK. "There are a lot of other things we need to look at developing the business, rather than worrying about where the primary listing is."

Interview, Page 5

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