Grafton Group sees 17pc hike in H1 profits

Grafton Group has experienced a surge in the first half of the year, beating analysts’ expectations.

Underlying operating profit, excluding a hefty once-off pensions-credit arising from restructuring, was €36.6m between January and June. This is an increase of 17pc on the same period last year.

Davy Stockbrokers said the result was 5pc ahead of its forecast and that the market is likely to react positively.

Sales at the building materials supplier were €1.07bn, compared to €1.05bn last year. Three quarters of this came from the UK, 22pc from the Republic of Ireland and 3pc fromBelgium.

The company said profitability improved in all three of its main segments, merchanting, retailing and manufacturing.

In its Irish retail operation where Grafton operates under the “Woodie’s DIY” brand, losses were expected but profits improved by almost €4m to €0.3m. This is down to an improvement in gross margins and reduced costs thanks to a reduction in rents.

“The group continues to make good progress following several years of challenging market conditions and the measures we have undertaken to reduce overheads, strengthen gross margins and improve profitability have provided the business with a strong platform from which to build” said chief executive Gavin Slark.

“There are tangible signs of stability returning in our core markets with the recovery in the UK housing market providing a positive backdrop for the group, although we feel it is prudent to assume that any recovery will be gradual and will involve its own challenges. However, regardless of the wider market conditions, we remain focused on driving further internal improvements in our existing businesses in order to maximise shareholder returns”.

The company has increased its interim dividend by 17pc to 3.5c, compared to 3c in 2012.

Shares in Grafton rose by 0.15pc this morning to €6.28. Source: The Irish Independent