Woodie's and Chadwicks owner sees pickup despite Brexit headwinds

Grafton, the owner of the Chadwicks building merchants and the Woodie's retailer in Ireland, said sales here continue to grow strongly and it expects demand to pick in Britain later this year.

Shares in Grafton--which is widely considered the ultimate Brexit bellwether stock--fell 2.5% in the latest session in the latest session as UK Prime Minister Boris Johnson again talked tough over the final trade deal with the EU.

The London-listed shares had rallied last year as a key acquisition in the Netherlands helped insulate it from the Brexit-driven currency headwinds that was then the company. It generates around half of its revenues in sterling from Britain where it owns the Buildbase and Selco outlets, around a third in euro from the Republic, where it owns 36 Chadwicks stores, the Panelling Centre, and the 38 DIY Woodie’s stores. Its Dutch operations have now become particularly important and highly profitable, following its €131m acquisition last year of Polvo and its 51 branches.

Unveiling full-year 2019 results, Grafton said pre-tax profits from continuing operations rose 4% to £172.6m (€205.4m) on revenues of £2.67bn, up 3% from the previous year.

Chief executive Gavin Slark said the company had continued to tap "very significant" growth in Ireland over the last six years but he anticipated that the rate of growth would slow.

In Britain, he said that there was no significant "Boris bounce", referring to the lifting of the uncertainty after the British general election in December, but anecdotally Grafton could be an uplift in orders by mid-year.

He said that Mr Johnson's new government had pledged to spend on house-building programmes, which could generate more business for Grafton. The same outcome was likely to unfold in Ireland where all parties who contested the election were committed to building more homes, he said.

"Our overall expectations are positive for our portfolio of strong cash generative businesses and we are confident of continued progress in 2020. We will continue to pursue our focused and disciplined growth strategy," the company said. Mr Slark said the company had significant resources to expand further in northern Europe.