27th Aug 2014 08:52
LONDON (Alliance News) - Building merchants Grafton Group PLC Wednesday said it delivered a strong underlying performance in the first half, despite a drop in profit after its results in the previous year were boosted by a pension credit of GBP27.1 million.
The Dublin-based FTSE 250 DIY group posted pretax profit of GBP45.9 million for the six months ended June 30, down from GBP51.5 million a year earlier, even though revenue crept up to GBP1.02 billion from GBP912.2 million. Underlying pretax profit, which excludes a non-recurring pension credit of GBP27.1 million, rose to GBP45.9 million from GBP24.5 million a year earlier.
The owner of brands including Selco, Buildbase and Plumbworld last October completed a move to the London market from Dublin in a bid to stimulate more international investor interest and entered the FTSE 250 in December. The company has three main divisions - merchanting, retailing and manufacturing.
Grafton said its UK merchanting business, which makes up the largest proportion of group revenue, saw revenue rise 11% to GBP754.0 million from GBP670.6 million a year earlier. Operating margin increased to 6.1% from 5.0%
Irish merchanting revenue increased 5.6% to GBP121.4 million from GBP114.9 million a year earlier. Grafton said the Irish merchanting business traded against the backdrop of "solid growth" in the Irish economy and a pick-up in activity in the housing market. In addition, a shortfall in supply saw house prices continuing to trend upwards particularly in the Greater Dublin Area, where there is a shortage of family homes.
The Belgium division, which has been expanded by the acquisition of Binje Ackermans SA, a six-branch builders merchanting business, saw revenue jump 58% to GBP46.3 million from GBP29.3 million a year earlier.
"Trading was strong in the first quarter as the economy expanded at its fastest pace in three years supported by domestic spending while the mild weather during the quarter also benefited new build construction activity," Grafton said of its operations in Belgium.
Overall, group operating margin increased to 5.0% from 3.4% - a key milestone for the company.
"These results demonstrate further progress by the group, in particular, the milestone of a 5% group operating margin, which is a key point in our journey from recovery to growth," Chief Executive Gavin Slark said in a statement.
"We believe the overall outlook is positive, notwithstanding a slower rate of growth in the second half and we are confident that the full year's trading performance will be at least in line with current consensus expectations," he added.
On the back of its performance the company increased its interim dividend 25% to 3.75 pence from 3.00 pence.
Grafton shares were quoted up 1.1% at 641.00 pence Wednesday morning.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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