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TOP NEWS: Grafton ups returns despite 30% fall in interim profit

31st Aug 2023 09:22

(Alliance News) - Grafton Group PLC on Thursday said profit fell in the first half of 2023, but it increased its interim dividend and launched a new share buyback, having just completed one.

The Dublin-headquartered building materials firm and DIY retailer said pretax profit for the first six months that ended June 30 was GBP93.6 million, down 29% from GBP132.4 million in the first half of 2022.

Operating profit fell 33% to GBP94.3 million from GBP140.1 million, and basic earnings per share fell 25% to 34.2 pence from 45.8p.

Revenue however increased by 3.2% to GBP1.19 billion from GBP1.15 billion, but operating expenses grew by 6.3% to GBP1.10 billion from GBP1.03 billion. Finance costs increased 26% to GBP12.5 million from GBP9.8 million.

Grafton said its residential repair, maintenance, improvement and housebuilding activities were hurt by cost of living pressures. Meanwhile in the Distribution segment, volumes were lower despite inflationary pressures on the cost of building materials and construction supplies having moderated.

Grafton declared an interim dividend of 10.0p per share, up 8.1% from 9.25p a year before.

The company also announced the completion of the GBP50.0 million share buyback it had started in May, having repurchased 6.0 million shares at an average price of GBP8.33 each.

Grafton also on Thursday launched another share buyback programme worth up to GBP50 million. The programme will end by January 31.

Shares in Grafton were up 2.6% at 877.90 pence each in London on Thursday morning. It has a market capitalisation of GBP1.83 billion.

Grafton said the new buyback reflects "confidence in the prospects for the group", as well as its strong balance sheet and cash generation from operations.

Grafton's net cash position was GBP438.4 million at June 30, down from GBP458.2 million at December.

"The strength of the group's market positions and our experienced management teams have underpinned a resilient performance in the face of challenging conditions during the first half," said Chief Executive Officer Eric Born. "Grafton's robust cash generation has enabled us to return GBP132.7 million to shareholders in the half year by way of share buybacks and dividends whilst leaving our net cash position broadly unchanged."

Looking ahead, Born commented: "This strong balance sheet, together with our nimble operating structure, will allow us to take advantage of organic and acquisitive growth opportunities.

"Whilst uncertainties remain in the short term, we are confident that Grafton is exceptionally well positioned to benefit as the cycle turns, markets normalise and consumer confidence gains momentum."

By Emma Curzon, Alliance News reporter

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