Grafton builds profits to €192m

GRAFTON Group delivered strong results in line with market expectations last year. It was a two-sided story, however, with the Irish division delivering exceptional results while performance in the British market was flat.

Operating profits of €215.9 million were split 50/50 in the year to December 31, 2005 with the British division marginally ahead at €108.2m against a €107.7m contribution from the Irish companies.

Overall pre-tax profits rose from €145.8m to €192.2m a rise of 32%. Ireland gained from a €48.2m contribution from the Heiton Group, acquired in 2004.

Turnover is still biased towards the British market, which accounted for €1.6 billion in sales against €1bn for Ireland.

Shareholders will be paid a final dividend of 15.75 cent, a 21% increase on the previous year.

Grafton operates its building materials businesses across Britain and Ireland from 480 locations, employing 10,300 workers.

Its best-known Irish brands include Atlantic Homecare, Woodie's DIY and Chadwicks Builder centres, and latterly, Heitons. In Britain key subsidiaries include Buildbase, Plumbase and Jackson Building Centres.

The group is fully listed in Dublin and London and its market capitalisation is roughly €2.4bn.

Grafton shares rose 3c yesterday by mid-afternoon to €10.60 after the figures were revealed.

Some brokers expect the shares to reach €12 this year.

Looking ahead, the group is confident of another good year as the Irish construction sector continues to encounter strong demand.

Finance director Colm Ó Nualláin said house building this year will probably match last year's figure of 80,000 and was likely to be repeated again in 2007.

He said there was no clear evidence of a softening in the market.

Property prices are impacting favourably on the group's balance sheet too.

It has an Atlantic Homecare for sale in Sandymount, County Dublin which will fetch at least €25m. It was an opportunity too good to pass up, the company said.

No other sales are planned. In Bishopstown, Cork, the group is sitting on 20 prize acres of land occupied by a Heitons builders merchants operation. But executive director Leo Martin said the group was in "no hurry to sell".

The outlook is for further growth despite a challenging first half in Britain, where margins fell and which the group does not expect to start to recover until 2007.

Executive chairman, Michael Chadwick said the group spent close to €500m on acquisitions and investments last year and will continue to expand both in Britain and Ireland. Mainland Europe is also coming into the frame for development, although he said there was "nothing imminent".