Grafton trading performance remains strong in first six months of 2022

Building materials supplier Grafton Group has reported a good trading performance in the first six months of the year, with revenue continuing to rise and its distribution businesses putting in a strong performance.

The group said overall trading was in line with plan for the half year and, despite the weakening of the international macro outlook in recent months, it was not adjusting full year operating profit expectations.

Total revenue was up 12.1 per cent in the first half at £1.15 billion (€1.36 billion), with average like-for-like revenue growth of 3.4 per cent complemented by acquisitions in Finland, Britain, Ireland and the Netherlands.

More than half of the group’s operating profit for the six months was generated outside the UK as Grafton diversified its earnings base geographically and sold its traditional merchanting business in Britain.

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The period also saw proceeds from previously announced property disposals of £24 million, with the profit on those disposals of £18.2 million.

In May, Grafton began a share buyback programme of up to £100 million, due to be completed by the end of the year. By June 30th, it had reached £43.8 million.

The distribution businesses in Ireland performed strongly, despite a return to more normal trading after the pent-up demand caused by lockdown. Chadwicks saw strong demand, driven by increased spending on materials used in a wide range of housing renovation and maintenance projects, an acceleration in the construction of scheme and one-off houses and an increase in non-residential private and public sector construction.

Sitetech, which was acquired at the end of February 2022, traded ahead of expectations.

The Netherlands distribution business also performed well, while the UK distribution business was more subdued against a strong 2021 and increases in prices.

Revenue at its Woodie’s DIY, Home and Garden business in Ireland saw a return to more normal levels, particularly in the four months to the end of April. The previous year saw the business make exceptional gains when Woodie’s was deemed an essential retailer while Ireland was in lockdown.

However, revenue continued to perform strongly, with the six months ahead of pre-pandemic levels by almost 26 per cent as customers continued to be strongly engaged in DIY, home and garden projects.

In Grafton’s manufacturing sector, CPI Mortars grew revenue strongly, while staircase manufacturer StairBox kept volume growth at good levels in the first six months of the year.

“The group’s overall trading performance was good against a very strong comparator in the first half of last year and our operating profit expectations for the full year are unchanged. Notwithstanding current macroeconomic risks, our portfolio of resilient high performing businesses has the flexibility to adapt to changing circumstances and is well positioned to outperform,” said Gavin Slark, Grafton chief executive.

“Grafton is in a very strong financial position and, with a pipeline of acquisition opportunities, the Group is well positioned to make continued progress on the delivery of its strategy.”

Grafton is also on the hunt for a new chief executive after Mr Slark said he planned to step down at the end of the year. The Sunderland native, who has been at the helm of the group for 11 years, will also stand down from his role on Grafton’s board from December 31st.