Irish recovery taking hold as Grafton Group revenues soar by 13% in year to date

Shares in Grafton Group jumped about 5% yesterday, on the back of it reporting strong double-digit revenue growth for the year so far.

In its latest trading update, the Dublin-headquartered builders merchants said that it generated total revenues of £2.11bn (€2.42bn) in the first 10 months of the year, up by 12.8% on a reported basis and by 10% on a constant currency basis.

The bulk of Grafton’s revenues are derived from its UK merchanting business and that division saw a modest increase in like-for-like revenue in the four months to the end of October.

Grafton’s main focus, of late, has been on expanding its Selco business, which is the fourth largest merchanting chain in the UK.

At the time of its half-year results in September, Grafton said its Irish merchanting business (merchanting or commodity sales, as a whole, makes up 92% of group revenue) was performing well and had contributed £10m to first-half revenues.

Yesterday’s update said that positive momentum had continued up to the end of October; helped by increased commercial property spend and a growth in the core residential RMI (repair, maintenance and improvements) market.

“The Irish and Netherlands businesses performed well and are attractively positioned to benefit from a relatively early stage recovery in the economic cycle and underpin the benefits to the group of exposure to multiple markets,” chief executive Gavin Slark said.

Grafton’s Irish-based retail arm — Woodie’s DIY — which represents 6% of total revenue continued to generate good like-for-like sales growth in the 10 months with management saying it benefited from gains in employment and disposable incomes and “a positive response from customers to the refocusing of the business in recent years”.

In September, Mr Slark said Grafton sees the current uncertainty surrounding the Brexit process as a short-term threat.

The group’s core UK merchanting business has seen flat trading this year with pressure particularly noticeable in the plumbing and heating services businesses.

“As with anything in life, the worst position to be in is one of uncertainty. Once you know what is happening you can plan accordingly,” Mr Slark said after the results.