Grafton Group sales accelerate in Q2

Grafton Group plc, the international builders merchanting and DIY Group, issued this trading update for the period from 1 January 2017 to 30 June 2017.  

Group Revenue

The Group performed strongly in the half year with the benefit of broadly positive market segment conditions and good strategic positioning in key markets.  Group revenue increased by 9.0 per cent to £1.34 billion (Six months to 30 June 2016: £1.23 billion) and by 6.2 per cent in constant currency.  Like-for-like Group revenue increased by 5.7 per cent. Total revenue growth in the UK merchanting business reflects branch closures in the second half of 2016.

Merchanting (92% of Group Revenue)

Selco reported double digit revenue growth driven principally by the rollout of new branches.  Six branches were opened in the half year and, following the opening of a branch in Warrington earlier this month, Selco now trades from 54 branches.  The business remains on course to open at least ten new branches this year. The traditional UK Merchanting businesses reported good like-for-like revenue growth and also benefited from the restructuring implemented in the last quarter of 2016. The Group's merchanting business in Ireland outperformed a recovering market where it has a strong leadership position.   The residential RMI market continued to register good volume growth and the recovery in the residential and commercial new build markets gathered pace.

The Netherlands merchanting business performed strongly against the backdrop of good growth in the Dutch economy and increased house building and housing transactions.   The 14 branch Amsterdam based Gunters en Meuser business, acquired in January 2017, traded in line with expectation. Second quarter revenue growth in the Belgium merchanting business more than offset a first quarter decline as the business continued to reorient its customer base towards a higher margin operating model. 

Retailing (6% of Group Revenue) Strong revenue growth in the Woodie's business was driven by employment and incomes growth and a relentless focus on improving the shopping experience for customers.  Monthly revenue trends in the second quarter were markedly influenced by the timing of Easter and demand for seasonal products.

Manufacturing (2% of Group Revenue) Good volume growth in the mortar manufacturing business in Britain reflected the strength of its market leading position and increased activity in the new housing market. 

Property Disposals The Group generated a profit of circa £2.0 million in the first half (H1 2016: £3.5 million) from surplus property disposals and full year property profit is expected to be circa £3.0 million (2016: £4.9 million).                                                                                                                                                 

Gavin Slark, Chief Executive Officer of Grafton Group plc commented today:

"We are pleased with the Group's first half trading performance which was better than we anticipated and provides a good platform for the full year.  Looking ahead, we expect to continue to benefit from both our strong market positions and exposure to multiple geographies and for the positive trends in the Irish and Netherlands businesses to continue in the second half.  Whilst we remain optimistic on the medium term outlook for the UK, we are cautious about the shorter term impact of current uncertainty and pressure on real incomes which may temper growth in spending on housing RMI."

Interim Results for the Half Year to 30 June 2017 are scheduled to be published on 31 August 2017.

Source: Insight DIY Team & Grafton Group PLC

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