14th Jan 2020 08:57
(Alliance News) - Grafton Group PLC said Tuesday its trading in November and December was better than anticipated but its end markets remained "subdued".
As a result, the Irish building materials supplier said it expects to report adjusted operating profit of about GBP202 million for 2019, compared to GBP194.5 million in 2018.
Grafton said it expects 2019 revenue from continuing operations to be GBP2.67 billion. In the first half, Grafton generated GBP1.44 billion of revenue from continuing operations. During the year, Grafton sold its specialist UK plumbing and heating business Plumbase and its Belgian Merchanting unit.
In 2018, the company generated total revenue of GBP2.95 billion.
Daily like-for-like revenue is expected to be 1.9% higher in 2019 versus the year before, despite slipping 1.8% in the fourth quarter.
"2019 was a year of significant strategic progress with the acquisition of Polvo in July which increased our scale and consolidated our market leading position in the Netherlands. We also reshaped our portfolio of businesses with the successful disposal of Plumbase and the Belgian Merchanting business in October," Chief Executive Gavin Slark said.
In the UK, Grafton said, households continued to be "very cautious" about spending as uncertainty persisted during the fourth quarter. The weak markets of September and October continued into November and December but did not deteriorate further, Grafton noted.
Grafton's Merchanting unit in Ireland saw volumes recover in November, with its Chadwicks business ended the year on a "firm note".
"The impact of softer fourth quarter trading in the Netherlands merchanting market was largely offset by positive gross margin trends supported by procurement gains and integration benefits," Grafton added.
The Woodie's DIY, Home & Garden business in Ireland delivered a strong trading performance in 2019, Grafton noted.
Fourth quarter revenue in the CPI EuroMix mortar manufacturing business was "marginally" down against a strong comparator the year before, Grafton said. The business benefited from good demand in the new housing market where market fundamentals remain robust, the firm added.
Slark continued: "While we remain cautious about the timing of any recovery in the UK merchanting market at this very early stage in the New Year, our expectations for 2020 are positive for the overall group and we are optimistic about growth opportunities. We are well placed to continue to successfully implement our development strategy supported by very cash generative businesses and a strong balance sheet."
Shares in Grafton Group were 5.9% higher in London on Tuesday morning at 908.95 pence each.
By Paul McGowan; [email protected]
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