Builders’ merchants and DIY firm Grafton Group increased revenues by just over 10% to the end of October, according to its interim management statement released yesterday.
Trading conditions, the group said, remained favourable during the period, supported by increased demand in the residential repair, maintenance and improvement (RMI) markets in both the UK and Ireland.
The pace of growth dipped somewhat from the earlier months of the year, however, following strong growth in the first six months.
Commenting on the group’s results, Grafton chief executive, Gavin Slark said that while growth in the UK declined somewhat, its Irish business was continuing to pick up.
“As anticipated, the growth in the UK market continues to moderate from the first half and the Irish merchanting business is showing a marked improvement from a very low base. The overall outlook continues to be positive and the Group remains on course to report full-year operating profit in line with expectations,” said Mr Slark.
Revenue for the 10 months to the end of October was £1.76bn (€2.22bn) — an increase of 10.1% on the £1.6bn turnover posted in the same period last year.
A recovery in residential RMI activity and in the new housing market drove volume growth in the UK merchanting business, which accounted for three quarters of Group revenue.
Meanwhile, Grafton’s merchanting business in Ireland continued the strong growth seen through the first four months, led primarily by a recovery from a very low base in demand in the residential RMI segment of the market and a tentative recovery in house building.
The group’s retail business — which accounts for 7% of its revenue — continued to experience subdued demand due to pressure on household budgets across Ireland which affected its DIY business here.
The group’s statement added that the firm’s financial position continued to be strong with low levels of net debt, significant undrawn bank facilities and good cash generation from operations.
Davy Stockborkers’ analyst, Flor O’Donoghue described Grafton as having “by some distance the best earnings momentum in the European building materials sector at present”. It’s core UK and Ireland merchanting operations continue to have good organic growth revenue, Ms O’Donoghue added.
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