Grafton Group is due to report first-half results this Thursday. The builders merchanting and DIY group's stock came under pressure last month following an interim management statement, which reported increased competition and some margin pressure in the UK business due to weaker pricing in the plumbing and heating market.

At the time, the company said trading in the seasonally more significant months of May and June reflected a continuation of these trends. The group said the anticipated momentum in growth in the UK had not yet gained the consistent traction expected, although the overall trajectory remains favourable.

“Taking these factors into account, the overall group operating margin is expected to be modestly ahead of the first half of 2014 before property profits. Property profits of £6 million in the half-year were higher than anticipated as a result of a property disposal in London.”

Cantor Fitzgerald senior investment analyst David Donnelly said Grafton should still be on track to meet its full-year numbers thanks to increased profits from property disposals, despite the increased competition in the UK market.

“We believe the increased competition and margin pressure will likely prove to be transitory and short-lived, however we await further detail on the nature of market conditions with the first-half results,” he said. “We also believe the success of the Selco brand can be maintained, and opens up new geographies to Grafton which were previously too small to support one of the company’s larger brands, like Buildbase.”

In July, Grafton said group revenue for the six months to June 30th, 2015, increased by 6.6 per cent to £1.08 billion and by 9.5 per cent in constant currency. Group revenue for the six months to the end of June 2014 rose by 11 per cent to £1.01 billion. This compares to £912 million for the same period in 2013. Underlying operating profit for the first-half of 2015 was up 62 per cent to £50.6 million, while profit after tax climbed 93 per cent from £18.6 million to £35.8 million.

The merchanting business in Ireland reported a significant increase in revenue, which rose 5.6 per cent from £114.9 million in 2013 to £121.4 million in the first six months of this year.