Grafton posts half-year results with 4% increases in sales

BUILDING MATERIALS group Grafton, which owns the Woodies and Heiton Buckley businesses, posted first-half results in line with expectations yesterday, as it reported a 4 per cent increase in sales for the first six months of the year.

Turnover at the company, whose Atlantic Homecare business entered examinership earlier this year, increased to €1.05 billion for the first six months of the year compared to €1.01 billion for the same period last year.

The company said the performance was “satisfactory in demanding market conditions”.

The increase in sales was driven in part by Grafton’s UK operations, which represent 74 per cent of the company’s overall turnover, although it also benefited from favourable sterling-euro exchange rates and cost-cutting initiatives.

Like-for-like turnover in the UK increased by 1.4 per cent in the first six months of the year, boosted primarily by a strong performance in the first quarter. Inclement weather affected second quarter performance.

Grafton’s Irish business continued to underperform relative to its British operations.

Its Irish builders merchanting division saw a drop of 9 per cent in sales, while its retail division, which includes the Atlantic Homecare stores which entered examinership in June, experienced a 12.5 per cent drop in sales during the period.

Grafton acquired Atlantic when it bought rival Heiton for €336 million in 2004. Earlier this week Atlantic Homecare’s period of examinership was extended by the High Court.

There have been at least two expressions of interest for the 13-store chain, which has been loss-making for the last five years.

Grafton Group, which operates builders merchanting stores and DIY retail shops in Britain, Ireland and, to a lesser extent, Belgium, employs more than 9,000 people.

Grafton closed down 1.77 per cent at €2.73 in Dublin yesterday evening.

Goodbody stockbrokers described the trading update as “encouraging”.

“We still see the potential for the share-price to double in the medium-term given targeted group margins of 7.5 per cent versus the current level of 3 per cent,” said Goodbodys, which is Grafton’s corporate broker.

Davy Stockbroker described Grafton’s performance in the first six months of the year as “solid”, given the difficult economic backdrop and the poor UK weather during the second quarter.