Grafton Group shares fell 2% after the builders’ merchants said it had sold its well-known plumbing supplies firm Plumbase in Britain for a net £60.7m (€68.3m), deal analysts said was consistent with it getting out of low-profit yielding and competitive businesses.
The UK is an important market for Grafton where it generates over half of its revenues. It generates over a third in the Republic, where it owns Chadwicks, Heiton Buckley, the Panelling Centre, and the 35 DIY Woodie’s stores.
Its London-listed shares have been under pressure for some time amid the slump in sterling and concerns over the outlook for the British economy.
They had bounced in late August after its earnings indicated it was weathering any Brexit downturn better than many had anticipated.
The sale will also raise questions about further disposals and whether Grafton has identified further acquisition targets.
Analysts at Davy and Goodbody said that the sale was further evidence of its will to focus on higher-margin areas. Davy described Grafton’s strategy as “relentless”. Goodbody said: “In terms of the impact on the group, Plumbase represented 9% of group sales but only 3% of profits, therefore the transaction is accretive to margins by circa 40 basis points.”
“This transaction represents a very positive outcome for Grafton and enables us to continue to focus our capital and resources on attractive growth opportunities that generate appropriate returns for our shareholders,” the company said.
The shares fell to 755 pence, valuing the company at over £1.79bn following a rollercoaster ride that has seen them trade as high as 938 pence and as low as 625 pence.
in the past year.