PROFIT GROWTH returned to Grafton, the builders’ merchant and owner of Woodies and Atlantic Homecare DIY chains, in the first half of the year on the back of increased activity in its British businesses.
Grafton, which draws more than half its sales from its British builders’ merchants businesses, said yesterday that revenues stabilised in the first half of this year at €979 million, slightly down on the €990 million it reported at the end of the comparable period in 2009.
Profits before tax in the six months ended June 30th increased by 256 per cent to €13.4 million from €3.7 million during the first half of last year.
Earnings per share grew 270 per cent to 5.6 cent in the first half of this year from 1.5 cent during the same period in 2009. The directors are proposing to leave the interim dividend unchanged at 2.5 cent a share.
Grafton refinanced a number of debts that were due to be repaid later this year. As result of an agreement with Bank of Ireland, Ulster Bank and HSBC, it has extended its repayment date to 2013.
The group cut its net debt between the end of last year and June by more than €41 million to €281 million. Grafton said yesterday that strong cash flow and tight control of capital spending allowed it to do this.
Operating cash flow topped €60 million, compared with €78 million during the first half of 2009. This included an improvement in its working capital position.
Shareholders’ funds increased by almost €55 million to €967 million. This included a €61.5 million gain from translating sterling assets and borrowings into euro.
The group had €330 million in cash at the end of June, a €60 million increase on the same time last year.
Much of the growth came from its British businesses. Grafton’s Irish builders’ merchants division lost €500,000 during the six-month period. In contrast, operating profits in its British merchanting businesses more than doubled to €27.9 million, while sales were up 5 per cent at €678.5 million.
Michael Chadwick, Grafton’s executive chairman, pointed out yesterday that new house-building in Ireland was down 90 per cent on its 2006/07 peak. “At that level, it must be very close to the bottom.”
