Subdued Grafton down by 8.7%
The Dublin-headquartered group said in its half-year trading update yesterday that its trading performance continues to improve, but the business climate in its core markets is showing only slow signs of recovery.
Grafton — which owns the Heiton-Buckley and Chadwick’s merchants businesses as well as DIY retailers Woodie’s and Atlantic Homecare — said that group turnover for the first half of 2011 amounted to around €997 million; marginally up on the €979m generated in the first six months of 2010.
“Turnover in the early months of the year benefited from more favourable weather conditions than in the same period last year and the rate of growth moderated in the second quarter,” Grafton said.
It added that while revenue in its British business grew by around 4.7%, on a year-on-year basis in the first half, turnover from the Irish operations was down by around 6%. This, it said, was impacted by what it called “challenging trading conditions” in the merchanting and DIY markets.
“Spending on housing RMI [repair and maintenance] and DIY was lower, due to general weakness in the economy, reflecting a decline in incomes and contraction in employment levels,” according to the company.
Yesterday’s statement went on to say the trading climate in Grafton’s key markets is only recovering slowly “in light of the continuation of weak mortgage lending and low levels of consumer confidence.”
“However, the group continues to significantly improve its trading performance from the historically low levels of the recession,” it added.
The trading update hit Grafton’s share price hard yesterday, with it dropping by 8.7230%, or 29c, to just over €3. It also prompted analysts to row back their full-year forecasts for the group.
Davy suggested its initial sales forecasts “may prove optimistic“, while Goodbody said it was pulling back its profit forecasts.
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