A strong performance from its Irish business and the recently-acquired Heiton Group in particular helped offset weak trading conditions in the UK to boost profits at Grafton by 32 per cent last year.
The builders merchants and DIY group, which owns both the Woodies and Atlantic Homecare chains, reported pretax profits of €192.2 million on sales of €2.63 billion, an increase of 40 per cent.
Each shareholder will get a 8.5 cent payout per share. This brings total share purchase payments to shareholders for 2005 to 15.75 cent, an increase of 21 per cent. The company sounded a confident note about the outlook, noting its Irish operations are set to benefit from the release of €16 billion in SSIA funds from May and continued strong growth in residential construction, although the DIY sector remains competitive.
"Recent economic data in the UK are encouraging, with improving consumer confidence and a gradual recovery in the RMI [ repair, maintenance and improvement] market is forecast for the second half of 2006," executive chairman Michael Chadwick said.
Grafton spent more than €527 million on 17 bolt-on acquisitions and other developments in 2005. It opened four new DIY stores in the Republic, in Naas, Limerick, Dublin and Drogheda, with a further store due to open in Castlebar today. Outlets are also planned for Navan and Nenagh this year, to be followed by Ennis and Donegal.
Grafton opened six new builders merchants branches and eight new plumbers merchants branches in the UK and a new dry mortar plant in Bristol. The group will continue to focus on making bolt-on acquisitions in the UK and Ireland to take advantage of continued consolidation in both markets.
"We have completed roughly one acquisition a month over each of the last five years and would hope to continue doing that as we go forward," finance director Colm Ó Nualláin said.
However, Grafton also plans to widen its horizons by looking at options for expansion in markets such as France, Spain, Portugal and Scandinavia.
Mr Ó Nualláin said there was nothing in the pipeline at present, but noted "part of our strategy will bring us across into continental Europe in due course".
The company also realised €9.6 million from the sale of properties last year, on top of the €7.5 million recorded in 2004.
It is currently selling a prime two-acre site in Stillorgan/ Sandyford, which houses an Atlantic Homecare facility, and is hoping it will fetch more than €25 million.
A breakdown of the results shows that the UK accounted for 61 per cent of sales last year while Ireland made up 39 per cent, up from 24 per cent in 2004.
Heiton, which delivered a very strong performance post-acquisition, contributed operating profit of €49 million on turnover of €608 million, as it enjoyed a margin of 8 per cent.
However, the company has felt the impact of greater competition in the Irish DIY market, with sales slipping by 2 per cent on a like-for-like basis.
The slowdown in the UK market, the impact of competition and the integration of Heiton's high volume/low margin British business put downward pressure on Grafton's margins in the UK market. They fell to 6.8 per cent from 7.6 per cent, the first dip in seven years. Grafton believes they will remain flat at best this year before starting to improve again from next year.
Grafton also announced the appointment of Roderick Ryan, an executive director at Glen Dimplex and the former managing partner of Arthur Andersen, as a non-executive director. The company said it was at an advanced stage in the appointment of a further non-executive director.
