17th Oct 2019 08:11
(Alliance News) - Builders merchant Grafton Group PLC warned Thursday that 2019 profit will be lower than market forecasts, after trading slowed sharply during the third quarter.
For the three months ended September, reported revenue expanded 4.5%, with like-for-like revenue 0.9% higher on the year prior. The Dublin-based firm explained that after an "encouraging" start, "trading towards the end of the quarter and more recently has been impacted by a softening in activity".
Volumes in the UK were hurt by weak underlying demand against the "backdrop of increased economic uncertainty". In Ireland, although the economy continued to build positive momentum there also was some slowing demand. In the Netherlands, generally "favourable conditions" were hurt by permit grants for new construction projects being delayed by a nitrogen emissions ruling.
For the nine months ended September, revenue increased 3.6% to GBP2.03 billion from GBP1.96 billion the year prior. On a like-for-like basis, revenue was 3.1% higher.
For 2019, Grafton now expects operating profit to be between 4% and 8% lower than the GBP206.4 million post-IFRS and GBP193.5 million pre-IFRS consensus market estimates.
In 2018, Grafton generated GBP187.5 million operating profit on revenue of GBP2.95 billion. Pretax profit stood at GBP181.3 million.
"Recent trading conditions are more reflective of market sentiment than business fundamentals," Grafton Chief Executive Officer Gavin Slark said. "Grafton remains well placed to continue to benefit from our strong market positions in Ireland and the Netherlands and from a recovery in the UK merchanting market."
"The group continues to focus on optimising trading opportunities in its markets, on cost control and cash generation and has a strong balance sheet to support value enhancing acquisition opportunities", Slark added.
Grafton shares were down 11% in London early Thursday at 775.00 pence.
By Ahren Lester; [email protected]
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