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Grafton profit jumps 15% amid record revenue
FTSE 250 builders' merchant Grafton Group, which recently acquired specialist decorators' merchant Leyland SDM for £82.4m, reported a 15% jump in full-year profit on Thursday amid record revenue, as it benefited from its exposure to multiple geographies and a diversified customer base.
In the year to 31 December 2017, pre-tax profit rose to £157.2m as revenue increased 9% to a record £2.7bn, reflecting strong organic growth, an improvement in the group's gross margin and good cost control.
Operating profit was up 15% to £163.7m and basic earnings per share rose to 54.9p from 47.7p.
Grafton said it saw growth in profitability in all segments and geographies. The company saw strong organic growth in Irish Merchanting, Woodie's DIY and Mortar Manufacturing, while acquisitions and organic growth increased the scale and profitability of the Dutch merchanting business.
Meanwhile, it continued to invest in Selco, with a record number of branch openings, while the traditional UK merchanting business made good progress, with operating profit exceeding £100m as it benefitted from internal initiatives and the restructuring undertaken in 2016.
As far as the outlook is concerned, Grafton expects overall conditions in the UK merchanting market to remain relatively flat and said that further progress in 2018 will continue to be dependent on realising benefits from self-help and other opportunities. It said activity levels in the UK housing repair, maintenance and improvement market are expected to remain subdued and sensitive to changes in housing transactions and consumer confidence and spending.
Chief executive officer Gavin Slark said: "2017 was a very good year for Grafton that saw all segments and geographies contribute to strong revenue growth and a 15% increase in adjusted profit before tax and earnings per share. Our expectations are positive for the current year and we remain confident about the potential to take advantage of opportunities that create value for shareholders."
At 0810 GMT, the shares were up 2.7% to 785.50p.