5th Mar 2014 08:55
LONDON (Alliance News) - Builders merchants and DIY company Grafton Group PLC Wednesday reported a strong increase in profits in 2013 as its markets started to recover from the long economic downturn, and it predicted further steady progress this year.
The company, like peers, was hard hit by the financial crisis and ensuing economic downturn as construction markets across Ireland and the UK almost ground to a halt, while the DIY markets also suffered to a lesser degree. Grafton and rivals have said 2013 marked the start of a recovery in the markets.
"The group recovery is making good progress in markets that are still challenging," Grafton Chief Executive Gavin Slark said in a statement Wednesday. Trading in the current year has been encouraging and, while we expect recovery in our markets to be gradual, the group is confident of building on its strong 2013 performance in 2014."
"There are signs that the relatively recent recovery underway in the UK economy has gained momentum as growth has strengthened in recent quarters. House price increases, improved access to finance and an increase in housing transactions should continue to support a recovery in the housing and Repair, Maintenance and Improvement markets," the company said.
In Ireland, the company saw its merchanting business stabilise in the first half of the year and then start growing, albeit from a low base, in the second half of the year.
The owner of brands including Selco, Buildbase and Plumbworld reported a pretax profit of GBP67.7 million for 2013, up from GBP25.1 million in 2012, as revenues increased 8% to GBP1.90 billion, from GBP1.76 billion and its operating margin increased to 4.1% from 3.5% as it cut costs.
Excluding pension credits and property impairments in 2013 and restructuring costs and amortisation in 2012, pretax profit rose to GBP64.9 million, from GBP48.1 million in 2012.
The revenue growth was driven by a 3.4% increase in like-for-like business as well as acquisitions and new store openings.
It said trading so far in 2014 has been helped by the lack of freezing conditions seen in early 2013. Daily like-for-like revenue in the UK merchanting business rose 9.8% over January and February, and by 7.1% in the merchanting business in Ireland. Its Irish DIY business reported like-for-like revenue growth of 1.6% for the two months, it said.
Grafton, which last October moved to the London market from Dublin in a bid to stimulate more international investor interest and entered the FTSE 250 in December, raised its dividend to 8.5 pence, from 7.0 pence, which it said reflected the improvement in its operating performance.
"The overall outlook is more favourable than it has been for some time and, as the UK's third largest merchanting business and the market leader in the Irish merchanting and DIY markets, the group is well placed to capitalise on an improvement in trading conditions while recognising that the recovery is likely to be gradual and involve its own challenges," the company said.
Grafton shares were up 0.8% at 674 pence early Wednesday.
By Steve McGrath; [email protected]; @SteveMcGrath1
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