Grafton posts record first-half profit

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Grafton Group PLC (ISE:GFTU) (LSE:GFTU) announced record profits for the first half and expects full-year earnings to be in line with its previous guidance, although it warned that supply chain issues are likely to remain a problem for some time.


The building materials distributor and DIY retailer saw adjusted pretax profit soar by 340% to GBP148.6mln in the six months to 30 June, with revenue jumping 46% to 1.02bn.


Adjusted operating profits before property profit climbed by nearly 204% to a record GBP142.4mln and operating margins reached 13.9%.


“Each of our market leading businesses in the UK, Ireland and the Netherlands contributed to these record results with a notable record profit contribution from the Woodie’s DIY, Home and Garden retail business in Ireland,” the group said in its earnings release.


Cash generation totalled GBP255.3mln from all operations in the first half and net cash stood at GBP302.5mln at the end of June.


The group is paying an interim dividend of 8.5p per share.


Grafton reiterated its previous full-year guidance for adjusted operating profits of around GBP240mln.


However, it warned that its supply chains will continue to be disrupted to some extent in the coming months.


The group said recovery in the UK economy is on track and the outlook is positive, while in Ireland, there are encouraging signs that economic activity is normalising following the lifting of restrictions relating to the Covid-19 pandemic. The Netherlands economy saw a pick-up in activity in the second quarter and the outlook is favourable with an expectation of a return to a steady growth path by the year end, it added.


Commenting on current trading, Grafton said average daily like-for-like group revenue increased by 4.4% in the period from 1 July to 15 August.


“The overall outlook for the Grafton businesses is positive given the strength of our current market positions, geographic diversity, strong balance sheet and investment pipeline, alongside supportive sector and macro trends together with the successful rollout of vaccines to date in the four countries where the group now operates,” said chief executive Gavin Slark.

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