Grafton Group has said it noted a positive performance from its Irish operations in the second half of last year, with its merchanting business continuing to perform strongly and its Woodie’s DIY retail arm benefiting from a pick-up in consumer confidence and spending.
The Dublin-based builders merchanting group — which now reports in sterling and has its shares listed in London to reflect the dominant contribution of the UK market to its earnings — yesterday, in its final trading update before publishing annual results in March, reported a 6.3% year-on-year jump in group revenue for 2015 to £2.21bn (€2.94bn).
In constant currency terms, revenue rose by nearly 9%. UK merchanting — the group’s main division — grew annual revenues by 8.9%.
Irish merchanting was up by 10.9% in constant currency terms but flat in actual terms.
“The merchanting business in Ireland continued to perform strongly as record low interest rates and growth in house prices and housing transactions supported increased activity in the residential repair, maintenance and improvement and new build markets against the background of an acceleration in the rate of growth in the Irish economy,” Grafton said.
It added that Woodie’s saw strong second half revenue growth on the back of strong demand and promotional activity.
“2015 was a year of significant development activity for the group with the continued expansion of the Selco branch network, bolt-on acquisitions in the UK merchanting market and the purchase of Isero, which now gives the group a presence for the first time in the Netherlands market,” said group chief executive Gavin Slark.
Mr Slark added that Grafton anticipates reporting operating profit for 2015 “in line” with the guidance management offered in its previous trading update in early November.
Consensus amongst analysts is for a profit of nearly £131m — which would be up from £110m in 2014.
However, the competitive nature of the UK market and the ongoing weakness being seen in Belgium has led Grafton to reduce its profit growth guidance by 3%-4% against market expectations.
“The group’s recent efficient use of its balance sheet, including the small but attractive bolt-on acquisition of T Brewer, announced last week, reinforces our view that current 2016 earnings expectations will ultimately prove to be light,” Flor O’Donoghue and Michael Mitchell said in a joint research note for Davy Stockbrokers.
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