Grafton dips despite strong outlook

Grafton dips despite strong outlook

By Geoff Percival

Grafton Group shares fell by over 2% despite the builders’ supply group saying a weather-related slowdown in trading in the last two months won’t affect annual performance, and that it remains on the lookout for more acquisitions.

Speaking at Grafton’s agm in Dublin, chief executive Gavin Slark said the group is continually looking for further acquisition opportunities, both in existing and new geographical markets.

Mr Slark said the group is open to spreading to new countries, but is more focused on finding the right takeover opportunities, be they in existing territories or new ones.

Grafton’s UK builders’ merchanting division accounts for over 90% of group revenue; but the group is active in Ireland, the Netherlands and Belgium too, with that spread helping to soften any Brexit-related slowdown in the UK market.

Indeed, underlying activity in the UK market was “slightly softer” in the four months to the end of April, partly due to the recent severe weather but also because competitive market conditions have exerted more pressure on prices.

After last month reporting a strong set of annual figures for 2017 — including a 15% rise in pre-tax profits and a 9% jump in revenues — Grafton yesterday said that total revenue, on a constant currency basis, was up by 6.2% year-on-year in the first four months of 2018.

UK merchanting saw a 5% annualised jump in revenue, while the same operation in Ireland saw a 7.6% increase, with the Netherlands ahead by over 20%.

Only the Belgian merchanting division saw a decline, with sales down nearly 4%.

The retail side of the business — which solely covers the Woodie’s DIY chain and represents 6% of group sales — grew revenues by 4.7%.

Mr Slark said underlying market conditions in Ireland remain positive, driven by “good momentum” in a recovering residential and non-residential RMI (repair, maintenance, improvement) market.

“We should continue to benefit from exposure to strong growth markets in Ireland and the Netherlands and, consistent with our view coming into the year, expect underlying demand in the UK RMI market to remain subdued, but housebuilding to perform strongly,” he said.

Analysts expect Grafton to generate 9% operating profit growth this year and the group said its full-year expectations remain unchanged.

Berenberg analysts recently tipped Grafton to keep growing via acquisition, forecasting the company has around £300m (€340m) to fund such activity — both in the UK and elsewhere — this year.

More in this Section

Aer Lingus adds flight to Greek island as part of summer scheduleAer Lingus adds flight to Greek island as part of summer schedule

Business movers: Kevin Davidson appointed as the new MD of BMW Group Ireland.Business movers: Kevin Davidson appointed as the new MD of BMW Group Ireland.

Employment law expert: Returning emigrant workers will be glad to see how well their rights are protectedEmployment law expert: Returning emigrant workers will be glad to see how well their rights are protected

Saudi Aramco reaches landmark $2 trillion in second day of tradingSaudi Aramco reaches landmark $2 trillion in second day of trading


Lifestyle

Ciara McDonnell talks to four high-profile people about their festive traditions and favourite tracksHere's what has these famous faces rockin’ around the Christmas tree

More From The Irish Examiner