PROFITS AT the group behind the Woodie’s DIY chain jumped almost 90 per cent to €25 million last year.
Grafton Group, which owns the Woodie’s and Atlantic Homecare chains, as well as builders’ merchants businesses in Ireland and Britain, said yesterday that revenues grew 1 per cent in 2010 to €2 billion from €1.98 billion.
Pretax profits increased by 88 per cent to €25.6 million last year, while operating profits almost doubled to €50.6 million in 2010 from €26.2 million in 2009.
Leo Martin, executive director and chief operating officer, said yesterday that 71 per cent of the group’s revenues now come from Britain, where it operates builders’ merchants businesses such as heating and plumbing equipment supplies.
Profit after tax came in at €64 million but this figure included a €38 million credit for deferred tax charges that Grafton has agreed with the British authorities. It also wrote down the value of Irish assets by €10 million.
Adjusted earnings per share, which take the tax credit and write down, as well as amortisation and other costs into account, were 18.5 cent in 2010, a 246 per cent increase the 5.4 cent earned in 2009.
The board is proposing to pay a dividend of 7 cent a share for 2010, a 40 per cent increase on the previous year. Grafton continued to use cashflows to cut net debt, which fell by €67 million in 2010 to €255 million.
On the balance sheet date, December 31st, net debt stood at 26 per cent of shareholders’ funds, which were €2.02 billion. The group has cash balances of about €200 million and existing bank facilities allow it to draw down further sums should it need them.
Grafton’s share price fell by 5.1 per cent in Dublin yesterday, where it closed at €3.62. Brokers suggested the market may have had misgivings about the deferred tax charge and the €10 million writedown of Irish assets. The group’s share price rose 30 per cent in the last three months.
Executive chairman Michael Chadwick said activity in its sector of the British economy has recovered from historically low levels.
“The outlook for Ireland remains unpredictable,” he said. “Group turnover for the first two months of 2011 is encouraging with a continuation of like-for-like sales growth in the UK and signs of stabilisation in Irish turnover.”
Financial officer Colm Ó Nualláin said yesterday that one of the problems it faces in the Irish market is the banks’ unwillingness to engage in mortgage lending.
The group estimates that 8,800 new houses were built in the Republic last year and that most of them were single, stand-alone homes in the countryside. Mr Martin said that it expects about 5,000 new homes to be completed in the State in 2011.
Grafton’s executives believe that Britain is in a “modest growth phase”.
Its results statement said its strong financial position and low cost base leave it in good shape to benefit from improvements in its markets.
Grafton group plc 2010 results
Revenue: €2 billion (+1%)
Pretax profit: €25.6 million (+88%)
Basic eps: 27.7 cent (+400%)
Dividend: 7 cent (+40%)
SUMMARY
DIY building supplies specialist Grafton returned to profit growth last year, thanks mainly to an improvement in market
conditions in Britain, where it generates over 70 per cent of its revenues. These increased 1 per cent to €2 billion, profit before tax grew 88 per cent to €25.6 million and basic earnings per share increased by 400 per cent to 27.7 cent. The rate of decline in its Irish builders' merchants business slowed during the year. The group, which owns the Woodies and Atlantic Homecare DIY chains, also cut excess capacity in its branch network, largely by amalgamating outlets. Grafton cut net debt by €67.4 million to €255.1 million, leaving it at 26 per cent of shareholders' funds. It also refinanced its debts.
