25th Aug 2022 09:09
(Alliance News) - Grafton Group PLC on Thursday reported a slip in profit for the first half of 2022 and gave a cautious outlook, flagging weaker-than-expected trading in July.
Shares in Grafton were down 2.5% at 706.40 pence in London early Thursday, placing the stock at the bottom of the FTSE 250 index in morning trade.
Revenue for the first half of 2022 rose 12% to GBP1.15 billion from GBP1.03 billion, but pretax profit slipped 7.3% to GBP132.4 million from GBP142.9 million.
The Dublin-based building materials firm said its performance was "good" against a spike last year due to a lockdown-driven rise in spending on the home, as people spent more time at home and in their gardens, with pubs and restaurants shut.
"Trading patterns normalised in all of our markets in the first half of 2022 as building materials shortages and supply chain pressures eased considerably. Building materials prices continued to rise sharply, including the carry-over effects of price increases implemented in the second half of last year, softening volumes in more competitive markets," Grafton said.
The company backed full-year consensus analyst forecasts despite the outlook for its markets being "weaker" now than at the start of the year.
Grafton put annual consensus at GBP267.0 million in adjusted earnings before interest, tax and amortisation. Adjusted pretax profit was GBP143.4 million in the first half, down 3.6% from GBP148.8 million a year before. For all of 2021, it was GBP268.6 million.
Post period end, Grafton saw a weaker-than-expected July, as hot weather in the UK and customer holidays hit trading. Average daily like-for-like revenue from the start of July to August 14 was flat.
It flagged cost-of-living pressures as an uncertainty, with disposable incomes being squeezed, and also highlighted "significant" building materials price inflation.
"Notwithstanding the short-term outlook, the strength of our brands, their market positions and our balance sheet strength leave us extremely well placed to respond to the opportunities that will undoubtedly emerge in due course. We fundamentally believe we will outperform through the cycle," said Grafton.
Grafton raised its interim dividend 8.8% to 9.25p from 8.50p last year.
On its chief executive search, Grafton said the hunt is progressing with the support of an executive search firm. Gavin Slark will continue as CEO until the end of 2022.
By Lucy Heming; [email protected]
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