Grafton pre-tax profits up as economy boosts sector

Grafton Group, owner of the Woodies DIY chain, has announced a 38 per cent jump in pre-tax profit to €52.8 million (£41.6 million) last year.

The company, which announced a final dividend of 40.3 cents, said it enjoyed a strong performance from its Irish and British operations.

In the Republic, a positive economic landscape helped operating profits grow by 20 per cent to €36.9 million on turnover of €310.4 million, a 13 per cent rise on 1999. This boosted margins to 11.9 per cent from 11.2 per cent.

The Irish operations were helped by strong construction growth with residential building up 7 per cent last year, although growth was lower in Dublin due to planning and supply constraints. The company also noted that growth was slower in the second half than in the first as the latest Bacon report impacted on housing starts.

Grafton said there was particularly strong growth in DIY, with turnover at Woodies up 26 per cent to €71.6 million. The company said it opened its 12th Woodies store in Athlone in June, while further stores are planned for Tralee and Newbridge. After that, it sees scope for opening one new store a year in the following three years.

The company believes that the outlook for construction output and consumer spending in the Republic remains positive, driven by economic growth and the National Development Plan.

In Britain, where Grafton trades from more than 160 locations, operating profits rose by 76 per cent to €29.2 million. Turnover grew by 51 per cent to €520 million, allowing the company to improve margins to 5.6 per cent from 4.8 per cent.

The company, which is the fourth-largest builders and plumbers merchants in Britain, said that market accounted for 44 per cent of profits and 63 per cent of total group turnover.

Grafton also plans to target Britain, where it made 12 acquisitions last year, for further expansion. "We are keen to grow, both through greenfield sites and by acquisition. We would expect further acquisitions this year, largely if not entirely in the UK," executive chairman Mr Michael Chadwick said. Shares in the group rose strongly following the results, closing nearly 5 per cent higher at €32.50.

Profits were boosted by a once-off gain of £650,000 sterling (€1.02 million), the deposit forfeited by the would-be purchaser when the proposed sale of the group's Orchard Wharf development site in London fell through last year.