Grafton confident in Irish and UK construction industry growth

The boss of the Grafton Group has said he expects construction in both Ireland and the UK to grow, as the building supplies giant reported a 9% rise in revenue and a 16% rise in pre-tax profits in the six months until the end of June.

Gavin Slark said fears of a skills shortage, around Brexit and the slow pace of homebuilding in Ireland and the UK would impact the construction sector were premature.

Revenue was up 9% to £1.3bn (€1.41bn) while profits before tax were up 16% to £75.4m, Grafton said.

The group said it had seen strong growth in its Irish merchanting and mortar manufacturing businesses, as well as a strong performance in its Woodie’s DIY stores. It added that it saw a recovery in profitability in its traditional UK merchanting business, while Holland and Belgium both saw growth in profit.

Net debt fell to £80.2m (€86.7m) from £96.3m last December, and net worth — its total equity — exceeded £1.1bn, Grafton said.

Shares were up more than 1% as analysts said Grafton performed ahead of expectations in the six months.

Mr Slark said: “One of the most pleasing things for us is that it is all parts of the group that have been performing reasonably strongly.

“The UK which is the biggest part of the group has done well, Belgium and Holland with businesses we have bought into a couple of years ago have done well, and we saw continuing growth in Ireland which is obviously a really important feature of our group.”

He said the firm was very confident that Ireland’s economic recovery would continue without a construction crisis in the medium-to-long term.

“The builders’ providers business in Ireland is doing well and Woodie’s DIY is doing very well in a country that is recovering economically in a really nice line. The fact that Ireland is coming back to life should mean it is sustainable for the medium to long term,” he said.

He added that he felt skills shortages would not slow the recovery in construction.

“It’s a great industry to be involved in and Ireland has proved itself historically that it can ramp up construction. There was between 14,000 and 15,000 completions last year, if you go back 10 years it was up to 90,000. Ireland has proved itself that it can ramp up capacity, and it is a very attractive place to live and work also ,” he said.

Mr Slark predicted the impact of Brexit would not hurt the firm in the UK.

“The underlying fundamentals in the UK are relatively strong. There are 60 million people living there and it is a mature economy. The need for housing isn’t going to go away and the need for repairs and maintenance isn’t going to go away. You might see a few speed bumps along the way but we look at the next three to five years in the UK with a fair degree of confidence,” he said.

Holland provided more opportunities for acquisitions before branching out further into Europe, he said.

“We still see opportunities in Holland in bolting on different acquisitions and as we continue to see value in those European markets, we will invest when we find it appropriate. We need to make sure that two years down the line we can look shareholders in the eye after buying a business.

“We need to absolutely prove incremental shareholder value. It’s also about driving value for shareholders in terms of getting that return on investment that we need on any acquisition deals,” he said.