Grafton Group open to further deals after Polvo acquisition

Revenues rose by 6.1% to £962m in first four months of 2019 on buoyant economy and good weather

Grafton Group chief executive Gavin Slark. Photograph: Nick Bradshaw

Grafton Group chief executive Gavin Slark. Photograph: Nick Bradshaw

 

Woodies DIY owner Grafton may do further deals in the Netherlands following its €131 million purchase of Polvo there last month, according to the Irish group’s chief executive, Gavin Slark.

Speaking after Grafton’s annual general meeting in Dublin on Wednesday, Mr Slark estimated that Dutch competition regulators would clear the Polvo acquisition some time this summer.

“After that, we could look at bolt-on acquisitions that we could do in Holland,” he said. However, Mr Slark stressed that Grafton was not bound by geography when deciding on deals.

Instead, he pointed out that the company focused on the quality of a business, its management and the price.

Along with Woodies, the Republic’s biggest DIY chain, London-listed Grafton owns builders’ supplies companies in Ireland, Britain, Belgium and the Netherlands.

Polvo sells tools, ventilation systems and other construction supplies from 51 branches in the Netherlands. Last year it turned over more than €127 million. Grafton agreed to buy the business last month. It already owns a similar business in the Netherlands, Isero.

If regulators approve the Polvo deal, the Irish company’s Dutch turnover will top €300 million a year.

Mr Slark noted that its Irish businesses – which also include Chadwicks and Heiton Buckley – were performing well despite the “Brexit angst” that dominated public debate in the first three months of the year.

“The Irish market itself is still improving, unemployment is very low and disposable income is still rising in Ireland,” he said.

Much of Grafton’s business in the Republic comes from people improving and extending their homes rather than new building. Mr Slark said that demand in this area was strong, aided by consumers’ confidence. The company also cited more favourable weather conditions for building than at the same period last year.

In the first four months of the year, group revenues rose by 6.1 per cent to £962 million (€1.12 billion) while like-for-like revenues rose 6.4 per cent.

By region, the Republic was the top performer when currency fluctuations were factored in. On a constant currency basis, Belgium’s merchanting arm grew 14.8 per cent compared to the 10.7 per cent growth at the Irish business. However, on an actual basis, the Republic’s growth of 9.3 per cent was higher than other regions.

In the UK, where Grafton’s main activity is supplying builders, Mr Slark pointed out that house construction would remain strong as there was an underlying shortage of homes.

Overall, the company’s retailing arm grew 10.8 per cent while its manufacturing division saw revenues rise 7.2 per cent.