Grafton shares jump as first-half results boost acquisition capacity
WOODIE’S owner Grafton Group has capacity and appetite for acquisitions, including in the UK, despite the current Brexit uncertainty.
Grafton Group shares surged yesterday after it reported estimate-beating sales and profit numbers for the first half of the year. Revenue across the Dublin-listed business was up 2pc to £1.4bn (€1.6bn), with its Irish retail arm up almost 17pc within that. Operating profit before property tax beat analyst estimates, at £99.2m.
Grafton CEO Gavin Slark said the half-year showed “real positives” in operating margins in its UK, Irish and Dutch arms. Grafton also announced the sale of a lower-margin Belgian unit. Mr Slark said the business is facing into the prospect of Brexit with “incredibly low debt” – just €100,000 at the end of the half-year.
This provides what he said was strength in the balance sheet for acquisitions and greater ability to withstand any potential shocks, as well as supporting a dividend.
While Brexit is a risk to the business, he said there was “only so much planning that can be done” for what remains an unknown quantity. “I have given up losing sleep over Brexit,” he said.
Although the British market is clouded by uncertainty, he said Grafton will “absolutely continue to look at the UK” for further expansion, including opportunistic acquisitions. In the first half of the year, the Chadwicks owner was boosted by a sharp rise in its Irish business, which had shown strong growth even on top of what had been a “spectacular” summer in 2018.
Growth in Ireland may moderate but the pace of economic expansion “feels sustainable”, Mr Slark said.