Grafton profits up 13% for first half of year

PROFITS AT Grafton, the builders’ merchant and owner of Woodies and Atlantic Homecare DIY chains, grew 13 per cent to €15 million in the first half of the year on the back of a strong performance in Britain and cost cutting at its Irish business.

Grafton, which draws more than 70 per cent of its sales from its British builders’ merchants businesses, said yesterday that revenues in the first half of the year increased by 3 per cent to €1 billion from €979 million during the same six-month period in 2010.

Profits before tax in the six months ended June 30th increased by 13 per cent to €15.1 million from the €13.4 million it reported at the end of 2010’s first half.

Basic earnings per share dropped 4 per cent to 5.4 cent from 5.6 cent. The figure includes a €1.1 million charge for amortisation and €4 million in restructuring costs.

Stripping out these charges, earnings per share rose 3 per cent to 7.2 cent in the first six months of 2011 from 7 cent during the comparable period in 2010.

Grafton is proposing to pay an interim dividend of 2.75 per share, a 10 per cent increase on the 2.5 cent a unit that it paid to shareholders following last year’s first half.

The group cut net debt during the period by €35 million to €245.8 million from €281 million. Chief executive Gavin Slark said yesterday that Grafton has agreed in principle with its banks terms to refinance its existing debt.

This will leave the group with five-year facilities for €270 million that will be due for repayment in 2016. That comprises new facilities of €75 million and refinancing existing facilities of €195 million.

It has also agreed in principle a new three-year revolving facility for €33 million which will be due for repayment in 2014 and to extend the maturity of an existing facility of €85 million until 2014.

Turnover in its Irish builders’ merchants business fell to €150 million in the first half from €161 million during the same period in 2010. The division delivered €1 million in operating profits, largely thanks to continued cost cutting.

Mr Slark said that the Irish operation is well positioned to cash in once conditions recover here, but he agreed that it was difficult to predict when such a recovery would happen.

Woodies and Atlantic Homecare accounted for €112.1 million of the group’s sales, almost 5 per cent down on the same period last year, when revenues reached €117.5 million.

Its British merchanting business grew sales by 5 per cent to €712.7 million and operating profits by 14 per cent to €32 million. The group completed two small “bolt-on” acquisitions during the period.

The Belgian business, BMC Groep NV, in which it has a 53 per cent stake, contributed €10.8 million to sales. That operation now has seven branches and an annual turnover of €50 million.