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UK building supplies growth gives boost to Grafton
March 7, 2013 / 8:12 AM / 5 years ago

UK building supplies growth gives boost to Grafton

* Underlying operating profit up 33 pct at 72.9 mln euros

* Revenue rises 6 pct to 2.2 bln euros

* Expects to make further progress in 2013

By Stephen Mangan

DUBLIN, March 7 (Reuters) - Irish building and home improvement supplies group Grafton recorded a 33 percent rise in profits on Thursday, buoyed by a strong performance in the UK market and a slowing rate of decline in Ireland.

The group, which competes with Travis Perkins and Wolseley in the UK under various brands, posted a full-year underlying operating profit of 72.9 million euros ($94.77 million), up from 54.7 million euros the previous year.

“It’s the most positive start we’ve had to a year in five years,” Chief Executive Gavin Slark told Reuters in a telephone interview on Thursday.

In its last trading statement in January, Grafton forecasted last year’s operating profit to come in around 70 million euros, ahead of market expectations of about 65 million euros.

In its full-year results Grafton said its profit increase was driven by an outperformance in UK merchanting markets, which remain weak overall but are showing signs of improvement.

“The critical thing is that there is just so much uncertainty. That’s why we still have to be focused on what we can do for ourselves rather than the markets bringing us any kind of recovery,” said Slark.

The company has attributed its survival to the expansion of its British business over the past two decades, which accounts for nearly three quarters of its turnover and embraces a wide range of branded outlets, including Buildbase, Plumbase, plumbWorld and Selco.

The Irish economy, however, mired by austerity and weak domestic demand since a property bubble burst in 2008, has remained challenging for Grafton, with cost reductions offseting the impact of merchanting revenue decline for 2012.

“One of the things that we’ve seen since Christmas is little tiny pockets of construction activity, particularly in the Dublin area, popping up ... if we could have stability in Ireland this year I would take that,” he said.

Slark said the group also saw encouraging growth in Belgium and is looking to expand further afield, having also moved recently into Poland.

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