Revenue at Woodie’s owner rose 8.7% last year

Grafton Group has reported strong growth in a trading update for the year just ended

The company’s Irish subsidiary, Woodie’s, has 35 branches nationwide offering a range of DIY products.

The company’s Irish subsidiary, Woodie’s, has 35 branches nationwide offering a range of DIY products.

 

Revenue at Irish-headquartered building materials company Grafton Group grew by 8.7 per cent last year, it said in a trading update on Friday.

The company’s Irish subsidiary, Woodie’s, has 35 branches nationwide offering a range of DIY products, paints, lighting, homestyle, housewares, bathroom accessories, building, gardening products and fitted kitchens.

Its Irish merchanting business trades under the Chadwicks and Heiton Buckley brands in the Republic.

Grafton, which is listed on the London Stock Exchange, said that revenue from its Irish merchanting operations grew by 9.3 per cent, or 8.4 per cent on a constant currency basis, in the year ended December 31st, 2018.

Group revenue for 2018 was £2.95 billion, an increase of 8.7 per cent from £2.72 billion in 2017. Revenue growth in constant currency was 8.4 per cent and average daily like-for-like revenue increased by 4.3 per cent.

The manufacturing arm of its business saw revenue growth of 19.2 per cent on a constant currency basis.

“As expected, the rate of growth moderated in November and December following above trend growth in September and October,” it said.

“With a good performance over the year, the group anticipates reporting earnings before interest, taxes, depreciation, and amortization (EBITDA) for 2018 slightly ahead of the top end of analyst expectations.

“As part of our overall strategy to improve returns, the group disposed of two small non-core UK businesses which contributed revenue of £40 million and EBITDA of circa £1.4 million in 2018.”

An analyst with Davy said the trading update indicated that the company was “very keenly valued”.

“2018 was another very fine year for Grafton, culminating with another encouraging trading update,” he said. “Trading profits for the year will now be circa 2.5 per cent above the latest consensus estimate.

Share price

“Formal results on February 28th should confirm that trading profits will have risen close to 50 per cent over the past three years. However, the share price is currently near where it was five years ago.

“Clearly, outside factors are weighing on the group’s rating, which is now pricing in what we consider a highly unlikely correction in earnings. Hence we believe Grafton is very keenly valued and is currently one of the best ideas in our building materials coverage universe.”

Grafton Group chief executive Gavin Slark said the company was well positioned to deliver its strategy for the year ahead.

‘Multiple geographies’

“We are pleased with the strong performance over the year, with contributions from both organic growth and the Leyland SDM acquisition,” he said.

“The group continues to benefit from its exposure to multiple geographies and its diverse customer base. The group’s cash generative businesses, strong balance sheet and low level of net debt support our development strategy for the year ahead.”

Grafton compiled analyst forecasts show consensus EBITDA for 2018 of £185.1 million with the top end of the range £188.5 million.