27th Aug 2020 10:03
(Alliance News) - Grafton Group PLC on Thursday decided to pay no dividend for the first half of 2020, as profit fell sharply on declining revenue from all of its businesses except for the Netherlands due to the Covid-19 pandemic.
For the six months to the end of June, the FTSE 250 building materials distributor said pretax profit dropped by 76% to GBP20.5 million from GBP84.4 million a year before, on revenue that declined by 29% year-on-year to GBP1.06 billion from GBP1.48 billion.
On a constant currency basis, revenue dropped by 20%.
The fall in revenue mostly stemmed from the UK and Ireland as a result of action taken by both countries to prevent the spread of Covid-19 through the shutdown of branches amid lockdown measures, instead of a lack of demand in customers.
Revenue from UK Distribution declined by 30% to GBP605.4 million, while the Irish Distribution segment fell by 16% to GBP190.2 million.
However, revenue from Netherlands Distribution increased by 71% to GBP138.1 million, due to a milder lockdown in the country resulting in a less severe downturn in the economy compared to other countries in Europe.
Due to the virus's effect on trading, Grafton will not pay an interim dividend, compared to the 6.5 pence per share payout made the year before. However, the Dublin-based company said it will consider whether it will pay the suspended second interim dividend for 2019, and a full payout for 2020.
Looking ahead, for the period from July 1 to August 16, average daily like-for-like revenue increased by 3.8%, due to a 12% rise in Irish Distribution and 34% rise in Retailing, more than offsetting declines in the UK Distribution, Netherlands Distribution and Manufacturing divisions.
Based on current trends, Grafton expects its adjusted operating profit for the second half of 2020 to be similar to that for the same period the year before.
"Grafton's resilience, market positioning and geographic diversity together with its low debt and strong liquidity leaves the group well positioned for continuing progress. We are very encouraged by the performance of the group in recent months as it emerged in a strong position from the Covid-19 lockdown and based on current trends the group should deliver a similar level of adjusted operating profit in the second half to the comparable period last year," said Chief Executive Officer Gavin Slark.
Shares in Grafton were 5.8% higher at 788.50 pence on Thursday in London.
By Dayo Laniyan; [email protected]
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