Grafton outperforms on Irish construction recovery

Builders merchanting group points to ‘siginficant increase’ in Irish revenues

Gavin Slark, the chief executive of the Grafton Group, which reported strong interim results on Thursday, said the company remains on the lookout for acquisitions but is struggling to find suitable buyout candidates at the right price.

The compan has historically low levels of debt and plenty of capacity to do deals. “[BUT] we have to be disciplined, you have to be able to justify what you’ve paid,” said Mr Slark. “But we continue to look for the right acquisitions.”

The builders merchanting and DIY group outperformed analysts’ expectations with its first half results on Thursday, with strong profits growth.

Davy stockbrokers said concerns that the London-listed group’s momentum might be “faltering” were overplayed.

In the six months to June 30th, revenues rose by 7 per cent to £1.08 billion (€1.47 billion), while group operating profit was up 21 per cent to £61.2 million.

Profit before tax rose by 26 per cent to £57.9 m, while net debt declined to a near two decade low of £51.1m, representing gearing of 5 per cent.

Its merchanting business in the UK, which represents three quarters of the group, delivered a solid performance with revenue up by 9.6 per cent to £816.7 million.

Grafton, owner of the Woodies chain, salso aid that consumer spending in Ireland has begun to "slowly extend" into the DIY market.

“The Irish retailing business experienced modest growth in revenue and improved profitability from a low base,” Grafton said, but noted that trading over the peak periods of Easter and public holiday weekends suffered from a reduced footfall due to weather.

On the group’s merchanting business in Ireland, Grafton said it reported “a significant increase in revenue and operating profit as the pace of growth in the construction market accelerated and extended into the commercial property and civil engineering sectors”.

The company said it will increase its dividend by 20 per cent to 4.50p.It also sannounced that Paul Hampden Smith has joined he board as non-executive director. Mr. Hampden Smith was group finance director ountil his retirement from the position in 2013.