Grafton Group delivered operating profit rose 8.2 per cent in the first half of the year on the back of a strong performance across the Republic and Iberia which offset weakness in the UK, Netherlands and Finland.
The builders merchanting and DIY retailing company maintained its outlook for 2026 with operating profit at the Dublin-based, but London-listed group forecast to come between £190 million and £200 million or the full year, compared to £190.2 million for 2025.
Operating profit in the first half amounted to £98.5 million (€114.6 million), almost £7 million higher than the estimate of Goodbody Stockbrokers, one of Grafton’s corporate brokers.
The group’s business on the island of Ireland, including the Woodie’s and Chadwicks chains in the Republic and MacBlair builders merchanting branches in the North, posted 10 per cent operating profit growth to £60.6 million as sales expanded 10.3 per cent.
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This was driven by a strong economy and construction activity in the Republic and boosted by the acquisition of Cork-based timber-frame solutions supplier to home builders, Cygnum, in March for a price, disclosed in the interim report, of £58.7 million (€68.2 million). Activity in the North remained challenging in line with the wider UK, it said.
Chief executive Eric Born told The Irish Times that Grafton has found it more difficult in Britain in particular to pass on the full extent of the latest bout of inflation, which has been driven by the effect of oil price increases as a result of tension in the Middle East. He said the group also made a decision to “sharpen up” pricing in its key Selco merchanting business in that market during the first half in an effort to improve sales.
Operating profit plunged 29.3 per cent to £17.5 million in Britain in the first half as sales fell 5.1 per cent.
“Our outlook for the second half is not dissimilar to the first half, with Iberia and island of Ireland strong, Northern Europe mixed and continuing weakness in Great Britain,” said Born. “Our medium-term outlook remains very positive, supported by structural housing deficits in each of our markets and, in many cases, pent up demand for RMI [repair, maintenance and improvement].”
Grafton has seen its shares rally more than 25 per cent since Born held a capital markets day for investors in May and set a target to grow earnings per share (EPS) at a compound annual rate of more than 10 per cent out to 2030, driven by ongoing strength in the Irish market and recent acquisitions in Spain, where the economy and construction activity have outpaced the wider European market in recent years.
Grafton made an initial foray into Spain in late 2024, with the €132 million purchase of Barcelona-based air-conditioning and heating products distributor, Salvador Escoda. It followed up last month by buying another Spanish air-conditioning (AC) company, Mercaluz, which also has sales in Portugal, in a deal worth up to €175 million.
Operating profit in Iberia soared 111 per cent to £14.1 million as sales advanced 35.5 per cent. Born said that demand for air-conditioning products is set to grow strongly in Europe as heatwaves like those experienced this summer are predicted to become more common.
He said the group’s acquisitions pipeline is “looking good”, focused, for now, on deals in its existing markets “but we do monitor new markets, especially across the AC segments”, he added.
Grafton said that business is beginning to turn around in Finland as the economy there shows signs of recovery after a period of weakness. However, he added that market conditions in the Netherlands “remained subdued as the anticipated market recovery has been weaker than expected, resulting in a decline in volumes”.
The group has bought back and cancelled 21.7 per cent of its shares between May 2022 and the end of first half of this year at a cost of £453.9 million. It is currently nearing the end of a £25 million buyback programme announced at the end of June.
Grafton shares remain down 25 per cent from where they were trading five years ago, mainly due to weakness in the UK, once its biggest market.
