Grafton to sell £30m of Irish property once it can get ‘value’

Grafton, the building materials group, is lining up £30 million worth of its Irish property portfolio for sale.

The group, which yesterday reported an 8 per cent rise in its full-year revenues to £1.9 billion, said it would continue to hold a mix of builders’ yards and retail outlets until the property market improved further but would sell as soon as it could get “value”.

"We have a significant property portfolio and the opportunity is there to realise some cash for it. But we won't sell until we can get value for the assets," said Gavin Slark, Grafton's chief executive.

Grafton, which has operations in Britain, Ireland and Belgium and owns the Woodie's DIY retail chain, yesterday reported a 27 per cent increase in its underlying operating profits to £77.2 million.

Riding the back of a recovery in the UK market from where it derives 75 per cent of its sales, its profits before tax rose 35 per cent to just under £65 million.

It also announced a 21 per cent increase in its dividend to 8.5p per share.

Its UK network of builders’ suppliers increased revenues last year by 6.7 per cent to £1.39 billion, the company confirmed. Operating profitability in the division increased by almost a fifth to £76 million.

Mr Slark said the improvement in its British business was down to a mix of factors including a recovery in the property market there as well as improved efficiencies in its operations.

“You’ve really got to make sure you have more than one string to your bow in the UK merchanting market. We have been focused on making small acquisitions to improve our offering.”

Mr Slark also pointed to an improvement in its Irish merchanting business, which includes the Heiton Buckley and Chadwicks chains. Its Irish builders suppliers increased sales last year by 6.7 per cent to £243 million.

"There is also now some growth in Irish merchanting. I reckon Ireland is about a year behind the UK in the cycle of recovery," said Mr Slark.

Weakness
"People have often looked at our Irish operations as being a weakness of our business. But I actually believe that over the next three-five years our exposure to Ireland will be seen by the market as a strength."

He added that there was “cause for optimism” regarding Grafton’s Irish operations, but it would be “a shallow recovery, not a new boom”.

Mr Slark signalled there would be some "operational restructuring" of its Irish retail business Woodie's. Declan Roynane, formerly the head of Dixons in Ireland, has been appointed to run the business.

“We made some changes to Woodie’s in recent years and in hindsight we probably moved it a little bit away from its core, which is DIY, decorating and gardening. We will make some changes in 2014 to move it more back towards that,” said Mr Slark.

"Woodie's has survived the downturn, which is a good thing. It is one of Ireland's iconic retail brands."

Largest player
The group is now the largest player in the Belgian builders' merchanting business following the acquisition last year of the MPro chain.

CRH, which is also active in the Belgian market, was downbeat on its near-term prospects last month when it announced its annual results.

Mr Slark was slightly more sanguine.

“It will be a year of consolidation in Belgium. We are probably a little more upbeat than some other companies.”