12th Jul 2016 06:34
LONDON (Alliance News) - Builders merchanting and DIY group Grafton Group PLC on Tuesday said the UK's vote to leave the European Union is likely to weigh on demand in the new housing and repair, maintenance and improvement markets over the remainder of the year, after posting a rise in revenue in its first half.
Grafton said its revenue for the six months ended June 30 came in at GBP1.23 billion, up 13% from the GBP1.08 billion recorded a year earlier, with the largest gain made in its merchanting businesses, which make up 92% of total revenue.
This was largely thanks to a strong performance from its Irish merchanting division, where economic recovery continues to drive increased remand in the residential repair, maintenance and improvement market. The new housing market continued to recover from a low base and the non-residential sectors of the construction market also benefited from the positive trading environment, Grafton said.
However, like-for-like revenue growth in the UK merchanting division progressively weakened over the six month period, but the impact of this was partly offset by a stronger performance in the UK Selco Builders Warehouse business, which maintained favourable like-for-like growth during the second quarter. As such, on a constant currency basis, average daily like-for-like revenue growth was 3.3% in this division.
Grafton's Netherlands merchanting business, which it purchased in November, also performed well during the first half and benefited from an improvement in the ditch economy and recovery in the housing market.
Yet, Grafton noted increased uncertainty in its second half, on the back of the UK's vote to leave the European Union.
"The referendum decision in the UK to leave the European Union has created uncertainty about the near term outlook and prospects for the economy and this is likely to weigh on demand in the new housing and repair, maintenance and improvement markets over the remainder of the year," said Chief Executive Gavin Slark.
"Selco is a proven resilient model and continues to be the focus for development capital in the UK. Growth in the Irish and the Netherlands merchanting markets is expected to continue broadly in line with recent trends. The group's financial strength and geographic diversity leave it well positioned to take advantage of any opportunities that may emerge across the markets in which it operates," Slark added.
By Hannah Boland; [email protected]; @Hannaheboland
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