Grafton cautious on UK economy as profits rise 16%
Grafton Group, the builders merchanting and DIY group, delivered 16 per cent profit growth in the first half of the year though it warned that recent “softer trends” in the UK economy, its main market, are likely to be sustained for the remainder of the year.
Pre-tax profit rose to £75.4 million (€82.1 million) from £68.4 million for the same period last year, outpacing 9 per cent sales growth, which had been helped by euro strength against sterling.
The group said that its key UK merchanting business’s adjusted operating profit before property gains increased by 6.8 per cent to £50.1 million as it benefited from restructuring last year, where it closed 47 branches of its plumbing, heating and contracts business.
The division’s UK trade-only Selco Builders Warehouse business, which is geared towards small jobbing builders, continued to expand during the reporting period.
“Recent softer trends in the UK economy are likely to be sustained over the remainder of the year,” Grafton said. “The strength of housing starts should support house building activity while the residential RMI (repair, maintenance and improvement) market is expected to be broadly flat with continuing competitive pricing conditions.”
Irish merchanting operating profit rose by 44.14 per cent to £15.4 million, with strong sales growth in a recovering economy aided by currency benefits. Merchanting earnings also expanded in the Netherlands and Belgium, according to the company.
The group’s retail segment, comprised of the Woodie’s DIY stores in Ireland delivered 53.2 per cent operating profit growth to £4.7 million.
“Seasonal product categories including plants and shrubs, law mowers and pressure washers performed strongly and Woodie’s continued to develop its kitchens business from dedicated showrooms in half of its estate,” it said.