THE Woodies DIY company, Grafton Group, is looking for further growth after reporting a 38 per cent rise in pre-tax profit from £7.96 million in 1994 to £10.99 million in 1995.
Grafton intends to grow both organically and by acquisitions, executive chairman Mr Michael Chadwick said yesterday. While it is talking to Irish and British companies, nothing is imminent.
Grafton, he said, was not interested in a merger with Heitons as "it intended to expand on its own.
Grafton should show single digit growth in Ireland this year and some growth in Britain (a real turnaround in Britain is not expected until 1997). It is in line with budgets for the first two months, said managing director Mr Norman Kilroy. No forecast has been made for the full year but Grafton should manage a 10 per cent increase in pre tax profit to around £12 million. This is expected to be reduced by £300,000 due to rationalisation costs.
The latest results are better than market expectations. Growth has come from the core businesses and acquisitions. Sales rose by 15.8 per cent from £133.06 million to £154.09 million. The bulk of the increase, representing £15 million, was generated organically. So just 4.5, per cent is attributed to acquisitions.
Shareholders are to benefit from the strong growth, with a rise in the final dividend from 5p net per share to 7.5p, making a total of 12.5p. This represents a 47 per cent increase on the previous year. Earnings per share grew from 40.2p to 53.9p.
It, has strengthened its financial position and this is reflected in the cut in gearing from 17 per cent to 10 per cent.
All divisions in Ireland and in Britain recorded strong growth in turnover and profits. Grafton claims that the turnover growth out performed the market, so it increased its market share.
The Irish operations, accounting for 87 per cent of sales, are far more profitable, with an operating margin of 8.2 per cent, than the British businesses, which operate on margins of 4.2 per cent. The company attributes this to a different scale and product mix, and less manufacturing tax in Ireland.
Operating profit in the Republic increased from £7.8 million to £9.8 million while sales grew from £105.8 million to £119.5 million. In Britain and Northern Ireland, operating profit went up from £1.08 million to £1.46 million while sales rose from £27.2 million to £34.6 million.
Grafton's core business of merchanting and wholesaling in Ireland increased its sales by 12 per cent to £86.2 million with better profit margins. Chadwicks, the builders merchants business, enjoyed "record sales and profits" and "continued to lead the market", said Mr Chadwick.
Manufacturing in the Republic increased sales by 15 per cent to £13.8 million. In retailing, Woodies increased sales by 16 per cent to £20.5 million.
The shares yesterday rose 5p to 470p, their high for 12 months (low 360p). They are on a prospective price/earnings of 7.8 before exceptional charges.
