Monday 18 December 2017

Woodie's owner Grafton Group posts 21pc operating profit jump in first half

Grafton chief executive Gavin Slark
Grafton chief executive Gavin Slark
Gavin McLoughlin

Gavin McLoughlin

Irish builders' merchanting and DIY company Grafton Group, which owns Woodie's DIY, posted a 21pc operating profit jump in the first half of the year, making £61.2m.

Revenue rose 7pc to £1.08bn.

“The first half of 2015 has seen the Group deliver a strong performance across key financial metrics as it continues to execute its strategic plans. The overall outlook for Grafton is positive and despite current challenges the Group is well placed to make further progress in the second half towards delivery of its medium term targets of a 7pc operating margin and 15pc return on capital employed," chief executive Gavin Slark said.

The company said Woodie's posted modest revenue growth "as the emerging recovery in consumer spending gathered pace and began to slowly extend into the DIY market in the half year."

"The improvement in spending was supported by rising employment, moderate wage increases and small reductions in tax.  Sentiment continued to improve but the majority of consumers have not seen a marked improvement in their personal finances and remain cautious about spending as they continue to pay down mortgage debt."

It said its merchanting business in Ireland increased average daily like-for-like revenue by13.7pc

"Improved market conditions over the past two years have seen like-for-like revenue increase by 29 per cent resulting in some cost increases to support higher volumes and to invest in growth opportunities including a new branch in Cork City that opened at the end of 2014. These increases follow a cost reduction programme during the period from 2008 to 2013 in response to lower demand," the company said.

It said activity in the Irish housing market continued to improve, with transactions up 33pc year-on-year in the first half.

"The increase in transactions from a very low base was weighted towards the first quarter as tighter rules on mortgage lending introduced by the Central Bank tempered the rate of growth in the second quarter.  House price inflation slowed as anticipated due to the new rules on mortgage lending and reduced affordability following a period of rapid growth.  House building activity continued to grow from an exceptionally low base and contributed to revenue growth," the company said.

"A significant increase in supply is required for a properly functioning market to develop in response to pent up demand and changes in demographics.  Leading indicators of activity point to an acceleration in house building but it is expected to take a number of years to correct the current imbalance between supply and demand."

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