Grafton’s Irish woes continuing

Group revenue at Irish building materials giant, Grafton was up by 5.3% on a year-on-year basis in the first four months of this year, but further declines have been seen in its operations here.

The Dublin-headquartered group, which derives most of its revenue from its UK builders merchanting division, said that turnover up to the end of April amounted to €676m; up from €642m for the same four-month period last year.

According to the group’s latest trading update — published to coincide with its annual general meeting, yesterday — much of the revenue increase was driven by improved foreign exchange rates and the contribution from Grafton’s stake in its Belgian joint venture.

On a constant currency basis, the period’s group revenue growth was more likely to be around the 2% mark.

The British division — which generates 74% of total annual revenue for Grafton — saw its turnover rise by 1.7% during the period, with UK merchanting showing “a good improvement”, according to management.

The group added that market conditions in Britain have remained stable, despite the broader economic weaknesses in the country.

However, it was a different story for Grafton’s Irish operations — which include DIY retailers Woodie’s DIY and Atlantic Homecare.

Turnover in its Irish merchanting business fell by 9%, in the first four months on a year-on-year basis, mainly due to a further decline in RMI (repair, maintenance and improvement) spending amongst consumers. However, the impact on profit of the lower turnover in this division, was offset by cost reductions.

The Irish retailing business saw turnover fall by 16%, year-on-year.

“April trading in the DIY business was affected by adverse weather conditions, which delayed spending on gardening and seasonal products compared to the strong trading levels in April of last year, which benefited from very favourable weathers,” management said.

Overall, the group’s operating profit since the beginning of the year is ahead of the same period last year, “despite subdued volumes in the UK and a difficult macro-economic environment in Ireland”.

Grafton’s share price dipped by just under 1%, yesterday to close the day at €3.17.


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