Grafton shares rise 5% on positive trading report

SHARES in builders providers Grafton Group Plc rose by more than 5% yesterday after the company said profits for the first six months of the year would be “materially ahead of market expectations”.

Analysts reacted very positively to the trading statement from the company which owns the Woodie’s DIY chain.

Goodbody Stockbrokers’ Robert Eason said: “Given that Grafton are generally conservative in providing guidance to the market, we see today’s statement as a positive indication of very strong underlying trading conditions.”

Grafton said turnover in the first six months of 2004 is expected to exceed last year’s levels by more than 20% and this is reflected in significantly increased levels of operating profit.

“Group operating profit before goodwill amortisation for the half-year is anticipated to increase by over 25% on the same period in 2003,” the company said.

Merrion Stockbrokers’ John Mattimoe said full-year EPS growth is likely to be closer to 17-19%, compared to the projected 14%.

“Grafton’s potential to deliver annual mid-teen earnings growth over the medium term from UK margin expansion and bolt-on acquisition activity has been underpinning our buy recommendation on the stock,” he added. NCB’s John Sheehan said: “This update is further evidence of Grafton’s ability to successfully implement its twin strategy of organic growth and bolt-on acquisition.

“This has consistently delivered earnings-enhancing and value-creating growth over the years.

“We reiterate our accumulate recommendation on Grafton and price target of €6.60 per share.”

Grafton shares closed last night at €6.30.