Grafton reported a good first half driven principally by organic growth across the Group’s businesses. There was a significant improvement in all key measures of financial performance in the period, with a notable increase in return on capital employed to 13.2%.
“We are pleased to report that all geographies contributed to strong growth in revenue and double digit growth in profits and earnings per share in the first half,” said CEO Gavin Slark. “This encouraging outcome leaves us well placed to deliver our full year expectations.”
The Selco builders merchanting model continued to be the focus for development capital in the UK with the opening of nine new branches so far this year. The traditional UK merchanting business reported good growth in profit and benefitted from the restructuring implemented in the last quarter of 2016.
Furthermore, the market leading merchanting business in Ireland delivered a strong improvement in profit in a favourable market that saw good growth in demand in the residential RMI market and a recovery in house building and commercial construction that gained momentum in the period. The branch network was expanded with the opening of three new branches in Dublin. The operating profit margin before property profit increased to 8.0%.
Increased investment in the Netherlands merchanting business combined with positive market conditions delivered good growth in profit. The 14 branch Gunters en Meuser acquisition, completed in January of this year, made a good contribution to the first half performance. The performance of the Belgium merchanting business improved in a weak market in response to a range of measures to increase profitability.
The Woodie’s DIY retailing business in Ireland delivered strong growth in profitability as customers responded positively to the improved shopping experience in its stores; the operating profit margin advanced to 5.6%.
CPI EuroMix increased volumes supplied to the house building market. Profit was well ahead of the prior year and the operating profit margin for the division increased to 21.4%.
The Group continued to be in a strong financial position and was cash generative in the period with cash flow from operations of £107.4 million. Net debt fell to £80.2 million from £96.3 million at 31 December 2016 and net worth (total equity) exceeded £1.1 billion.