Tuesday 21 November 2017

Grafton's first-half revenue soars 9pc

Woodie's on Naas Road
Woodie's on Naas Road
Gavin McLoughlin

Gavin McLoughlin

Revenue at Woodie's owner Grafton Group rose 9pc year-on-year in the first half, according to a trading update issued yesterday.

The company said the result was ahead of its expectations.

Shares rose more than 5pc yesterday morning but pared their gains later in the day, to reach a 1pc rise by mid-afternoon.

Grafton said there was "strong revenue growth" at Woodie's due to "employment and incomes growth and a relentless focus on improving the shopping experience for customers."

It added: "Monthly revenue trends in the second quarter were markedly influenced by the timing of Easter and demand for seasonal products."

No detail was provided on profitability, with the full set of half-year results due to be published next month. The vast bulk of the group's revenue comes from its merchanting business, in which it sells materials and equipment to builders and plumbers. It has operations in the UK, Ireland, the Netherlands and Belgium.

The Irish merchanting business outperformed a recovering market, Grafton said. The residential RMI (renovation, maintenance and improvement) market had good volume growth and the recovery in the residential and commercial new build markets gathered pace.

The company said: "We expect to continue to benefit from both our strong market positions and exposure to multiple geographies and for the positive trends in the Irish and Netherlands businesses to continue in the second half.

"Whilst we remain optimistic on the medium-term outlook for the UK, we are cautious about the shorter-term impact of current uncertainty and pressure on real incomes."

Davy analysts Michael Mitchell and Flor O'Donoghue said the performance was "further evidence of the differentiated proposition that Grafton has become.

"While we await important detail regarding profitability in the period, we expect to increase our current-year estimates by 2-3pc at this stage," the analysts said.

"Grafton is actually the cheapest stock in the UK building distribution and DIY sector on a 2018 basis. It remains our top pick in the sub-sector, with current levels still an attractive entry point."

Irish Independent

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