BRUSSELS: Building materials and DIY group Grafton said today it was reducing its full year expectations for operating profit by 3-4% due to the competitive market and ongoing weakness in Belgium
In an interim management statement, Grafton said, however, that its overall trading was positive against a competitive backdrop in the four months to the end of October.
It said this was driven by broadly favourable economic and market conditions in the UK and Ireland which supported increasing spending in the residential repair, maintenance and improvement market.
The company, which owns the Woodie’s DIY chain here, said revenues for the ten months to the end of October 2015 came to £1.87 billion, an increase of 6% from the same time last year.
However, it said the rate of growth in group average daily like-for-like revenue eased – as anticipated – to 4.8% in the four months to October from 5.3% in the first half of the year.
Grafton said its Irish merchanting business continued to benefit from the ongoing recovery in the Irish economy, adding that increased spending on housing repair, maintenance and improvement (RMI) projects was the key driver of demand.
Its UK merchanting business, which accounts for three quarters of group revenue, reported solid growth in average daily like-for-like revenue for the period under review. It noted that its Selco chain opened new branches in Coventry and New Southgate and it plans to increase the branch network to 40 by the end of the year.
But Grafton said that difficult trading conditions in Belgium resulted in lower volumes and weaker margins.
Retailing, which makes up 7% of group revenue, was helped by the recovery in Irish consumer spending and improved consumer confidence. Grafton said that Woodie’s generated good like-for-like growth, partly due to destocking seasonal products.
With the continued progress of our organic initiatives including the development of Selco, bolt on acquisitions in the UK and the creation of a new platform for growth with the purchase of Isero in the Netherlands, we remain confident in the group’s ability to deliver continuing growth in profitability,” commented Grafton’s chief executive Gavin Slark.
