Grafton group ‘open to deals’

Irish building materials group, Grafton, has said it is open to making acquisitions this year, but only at the right value.

Speaking after the publication of a solid set of first-half figures, chief executive Gavin Slark said the group has a “substantial” war-chest available and could easily add to its growth-orientated operations in Britain and Belgium if the right opportunity presented itself.

“I can’t think of a single deal we wouldn’t be able to do if it represented good value. We’re willing to invest in the business,” he said.

Grafton’s figures for the six months to the end of June met with estimates and saw revenues rise 4.6%, year-on-year, to €1.05bn; underlying pre-tax profits rise over 18% to €23.8m; and adjusted earnings per share increase 11.6% to 8.1c.

“We’ve been able to progress the business — in terms of profits and cash generation — even though we’re trading in challenging markets,” Mr Slark said.

“The group continues to make good progress in markets that remain challenging and the outlook is still uncertain. The focus on self-help will continue to be at the forefront of our activities and the group remains in a financially robust state.”

Mr Slark said the Irish market remains challenging, adding it is “very difficult to see what will be the catalyst for recovery”, but maintained that recovery will happen.

Grafton’s merchanting business in Britain grew strongly in the first half, with revenues up nearly 10% on a year-on-year basis to €780.5m. But a near 9% revenue fall was seen in the corresponding Irish division, to €136.4m.

Around 76% of Grafton’s revenues are now generated from its non-Irish operations and that figure is growing. Nearly 70% of its shareholder base is also overseas, but management remains happy with its Dublin share listing.

“In order for us to remain on the Iseq, the exchange needs to be a strong, viable, and sustainable stock market and I think it is. Changing our listing would be a low priority issue, at present, and no change is currently planned,” Mr Slark said.

Regarding the future of Grafton’s Irish retail division, Atlantic Homecare is expected to emerge from examinership next month before being subsumed into the Woodies DIY brand, with a small number of store closures.