Builders merchant group Grafton Group plc is expecting to stick to its initial full year operating profit expectations, after a good trading performance in the half-year to June 30 2022.
That’s according to a trading update which showed total revenue up by 13.9% in constant currency. Average daily like-for-like revenue growth of 3.4% was complemented by a significant contribution from acquisitions in Finland, the UK, Ireland and the Netherlands. Group revenue increased by 12.1% to £1.15bn in the half year from £1.03bn in first half of 2021, excluding the traditional merchanting business in Great Britain that was sold on 31 December 2021.
Chief executive Gavin Slark announced his intention to leave the group on December 31 2022, which pushed the share price down 7.7%.
In Selco, revenue benefitted from the record demand for building materials as households increased spending on the home. In the first half of the current financial year, the UK trading environment saw significant double digit product price inflation for building materials. A new branch was opened in Exeter in April and a new branch in Cheltenham is scheduled to open before the year end which will take the estate to 74.
The MacBlair distribution business in Northern Ireland performed well with an increase in house building offsetting reduced spending on outdoor projects compared with last year’s record levels. The TG Lynes commercial pipe and fittings distributor in London grew revenue strongly and Leyland SDM, the specialist decorators’ merchant in London, benefitted from a gradual return of workers to their offices and investment in the leisure sector.
The positive first quarter revenue growth trends in the Isero and Polvo specialist ironmongery, tools and fixings distribution business in the Netherlands continued at a similar pace in the second quarter. Improved demand was driven by key account customers engaged on large construction projects including apartment blocks and warehousing, growth in value added solutions and increased spending by housing corporations on social housing RMI.
Half year revenue in IKH, the leading workwear, personal protective equipment, and tools wholesaler in Finland, was lower than the pre-acquisition comparative period in 2021. This was mainly due to lower demand for a number of weather sensitive seasonal categories in the early months of the year. Trading has been affected by weaker consumer confidence in light of the conflict in Ukraine but improved in May and June and we are confident that this high-quality business provides a sound growth platform in the Nordic region.