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Grafton Group reports marked recovery in Ireland

Gavin Slark - Grafton CEO

Builders’ merchants group, Grafton has seen a marked recovery in its Irish operations, with revenue here up by 14.7%, year-on-year, on a constant currency basis in the six months to the end of June.

The bulk of the Dublin-based company’s sales are generated in the UK, but in its first-half trading update it yesterday said its Irish merchanting business has “continued to perform ahead of improving trends” helped by growth in the residential repair, maintenance and improvement (RMI) market and a modest recovery in housebuilding activity here.

The Irish retail business — comprising the Woodie’s DIY chain — saw modest revenue growth in the period. Representing 7% of group revenue, Woodie’s saw a sales slowdown in the second quarter, hindered by unfavourable weather conditions, notably during the crucial June bank holiday weekend period. However, the second half of the year tends to be Grafton’s more important revenue-generating period.

On an overall group basis, Grafton’s revenues rose 6.6%, in the first half of the year, to £1.08bn (€1.5bn), with its core UK operations seeing a 9.6% jump.

On a sterling basis — Grafton delisted from the Iseq and switched its reporting currency from euro to sterling early last year — its growing Belgian business saw a 4.4% annualised sales dip, but revenue there was up by 7.2% on a local (euro) currency basis.

Group chief executive, Gavin Slark said : “The fundamental strengths of the group’s strong brands and market positions, together with operational improvements made in recent years, give us confidence that, despite current challenges, we can deliver the group’s medium-term targets outlined earlier this year.”

“The other key features of the update are that Grafton continues to flag margin pressure in the UK and has revealed a £6m property disposal profit in the first half. The latter, up from £1.6m in the first half of 2014, will ensure overall forecasts for the year — trading profit of around £130m — will remain intact,” noted Davy Stockbrokers yesterday.

Source : Geoff Percival - Irish Examiner

10 July 2015

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