Business Irish

Monday 17 December 2018

Grafton's shares soar on strong quarter

Grafton CEO Gavin Slark
Grafton CEO Gavin Slark
John Mulligan

John Mulligan

Shares in Woodie's DIY owner Grafton Group surged more than 7pc in London at one point yesterday after it posted a strong third-quarter update, with robust like-for-like sales figures for the period.

The group, which generates the biggest share of its revenue and profits in the UK, said that its revenue in the first 10 months of the year also rose 9.3pc to £2.5bn (€2.88bn) and was 4.4pc higher on a like-for-like basis.

"The group has benefited from its exposure to multiple geographic markets and saw its businesses in Ireland and the Netherlands perform well," said CEO Gavin Slark.

"Following a good first-half performance, overall trading in the last four months has underpinned our confidence that we will deliver our expectations for the full year."

In Ireland, Grafton owns merchanting businesses including Chadwicks and Heiton Buckley.

The group noted that average daily, like-for-like merchanting sales in Ireland rose 10pc during the third quarter of the year and were 7.8pc higher on the same basis in the first 10 months of the year.

Hot summer weather spurred sales at Woodie's DIY, with average daily, like-for-like sales at the chain having jumped 4.6pc in the four months to the end of October, and by 9.9pc in the first 10 months of 2018.

In the UK, the performance of Grafton's merchanting business was more subdued than in Ireland, but average daily, like-for-like sales still rose 4.2pc in the third quarter and by 2.7pc in the first 10 months.

Grafton's business in the Netherlands also performed well.

Davy Stockbrokers said it's currently forecasting that Grafton's operating profit will be £186m (€214m) in 2018, which includes a property profit contribution of approximately £5m.

However, it noted that Grafton's revenues in the first 10 months of the year are "comfortably ahead" of the broker's own expectations.

"While we understand some of this can be attributable to lower-margin businesses (such as contracting-related activities), the trend nonetheless suggests that our full-year trading profit estimate has scope to move higher," said Davy.

It added that it now expects Grafton to make a full-year profit of about £188m.

"This suggests Grafton is on course for trading profit growth of circa 15pc this year, a very impressive achievement," said Davy.

Goodbody Stockbrokers also now expects the group to make a profit of £188m this year. The revision marks a 3pc increase in Goodbody's previous profit expectation and means the broker has now updated Grafton's full-year 2018 profit outlook by a total of 13pc this year.

Irish Independent

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