BUILDING AND DIY merchant Grafton Group has forecast full year operating profit before restructuring and amortisation costs of €52 million to €55 million despite continued difficulties in the Irish market.
Turnover for the 10-month period to the end of October was largely flat at €1.73 billion, up slightly from €1.7 billion in the same period last year.
The group said that growth in its UK business, which now accounts for 70 per cent of turnover, was up 4.8 per cent in the 10 months to the end of October, having fallen by 0.2 per cent in the same period in 2010.
“Average daily UK like for like sterling turnover increased by 4 per cent in the 10 month period but moderated to 2 per cent in September and October. This compares to growth of 4.7 per cent in the first half,” Grafton said in a statement.
Grafton, which owns the Woodie’s and Atlantic Homecare stores, is the largest DIY retailer in Ireland and has 41 stores nationally. It is also the biggest builders and plumbers merchanting business in the country, operating 28 Heiton Buckley branches and 24 Chadwicks stores.
The decline in the group’s Irish merchanting business has continued with turnover down 7.7 per cent in the 10 months.
Turnover in the Irish retailing business fell by 5.7 per cent in the period to October compared to a decline of 4.6 per cent in the first half.
However, turnover in the manufacturing division increased by 6.4 per cent in the 10 months to October relative to growth of 6.5 per cent in the first half.
Grafton has forecast a profit of €52 million to €55 million before restructuring and amortisation for the full year, up slightly from the €50.6 million recorded last year. This was “due to the further delay in recovery in our sector and the resultant lower operational leverage,” it said.
“Uncertainty on the economy, low consumer confidence and tight lending conditions continue to limit growth in RMI volumes in the UK market,” Grafton said.
“In Ireland, the economic environment is likely to make trading conditions challenging for some time ahead.”
Goodbody Stockbrokers, which acts as a corporate broker to Grafton, said it would be downgrading its full year forecasts for it for 2011 by 10 to 15 per cent but that revisions to subsequent years were likely to be less as they factored in more self-help measures.
Davy noted that given the slower sales environment in both Ireland and the UK, Grafton now expected full year 2011 operating profit to be in the €52-€55 million range.
“This is well below our forecast of €59.8 million. We will review our forecasts but see little reason to change our ‘underperform’ rating,” it said.
