Grafton Group beats forecasts, hails "excellent" half-year
Grafton Group Ut (CDI)
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16:35 23/04/24
Grafton Group posted better-than-expected interim profits, hailing an "excellent" first half of the year across all of the company's operations.
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For the six months ending on 30 June, the building supplies merchant posted top-line growth of 9% to reach £1,448m, for growth of 19% in its adjusted profits before tax of £90.0m, alongside earnings per share of 30.8p.
Analysts at Numis had forecast profits of £82.0m.
In statutory terms, the bottom line grew 18% to £87.6m.
Commenting on the company's performance, chief Gavin Clark highlighted the double-digit rate of growth seen in profits across all segments of the firm, alongside "excellent" growth in key markets and the positive impact of 'self-help' measures and development activity.
"The geographic diversity of our operations continues to be an important strength of the Group. We made further progress towards our medium term financial objectives and invested £120.0m on the Leyland SDM acquisition and capital projects to support future growth in profitability," Gavin added.
As expected, its operations in the Netherlands and Ireland performed well, although in Belgium its merchanting business faced reduced demand.
Back in the UK, the company said that its merchanting business "strengthened" its market position via its new Selco branches, the firm's wholesale arm.
It did have to rely on self help measures and a "good" contribution from the purchase of Leyland SDM to offset "relatively flat underlying activity" in the UK.
However, its British mortar business, CPI EuroMix, saw "excellent" growth in profits, with operating margins in its manufacturing segments jumping by 220 basis points to 23.5%.
To take note of, the company's results were flattered by a slightly better-than-expected profit of £4.5m from property.
Cash flow from operations slipped from £117.9m to £109.7m throughout the period, on the back of higher depreciation and amortisation charges, as well as for share-based payments and a small increase in working capital requirements and the company's contributions to its pensions schemes.
Net debt grew, by £21.5m to £101.7m, as a result of the acquisition of Leyland SDM.
Looking forwards, management said they remained on track to meet their expectations for the full-year, despite the subdued outlook for their main UK operations.
"Overall conditions in the UK merchanting market are expected to remain relatively flat over the remainder of the year with competitive pressure on pricing continuing."
Grafton hiked its interim payout by 14% to 6.0p, in-line with its progressive dividend policy.
As of 0809 BST, shares of Grafton were trading 2.64% higher at 797.0p.