Grafton Group publish third quarter update

Following the successful completion of the sale of Plumbase and its Belgian operations, and against the backdrop of recent market trends, Grafton Group plc, the international builders merchanting and DIY Group, issued this trading update for the third quarter of 2019.  This update brings forward a planned update scheduled for 12 November 2019.

Like-for-like Group revenue in continuing operations increased by 0.9 per cent and total revenue by 4.5 per cent for the three months to 30 September 2019.  Following an encouraging start, trading towards the end of the quarter and more recently was impacted by a softening in activity.

Volumes in the UK merchanting business were affected by weak underlying demand fundamentals as households deferred discretionary spending on home improvement projects against the backdrop of increased economic uncertainty.  While the Irish economy continued to benefit from positive momentum, Grafton state there was some slowing in demand in the merchanting and DIY markets as consumer sentiment eased in response to a more cautious international outlook.  Despite generally favourable conditions in the Netherlands merchanting market, demand has been affected by a Court ruling on nitrogen emissions which has delayed the grant of permits for new construction projects. 

Group revenue from continuing operations for the nine months to 30 September increased by 3.6 per cent to £2.03 billion (nine months to 30 September 2018: £1.96 billion) and by the same rate in constant currency.  Like-for-like Group revenue increased by 3.1 per cent in the period.

The table below shows changes in average daily like-for-like revenue and in total revenue compared to the same periods in 2018 for continuing operations following the recently announced disposal of Plumbase, the UK plumbers merchanting business, and the Belgian merchanting business.

Against the backdrop of softer third quarter trends which have continued into October, the Group currently expects to report full year operating profit for continuing operations in the range of 4-8 per cent lower than current consensus¹. 

Gavin Slark, Chief Executive Officer of Grafton Group plc commented,“Recent trading conditions are more reflective of market sentiment than business fundamentals.  Grafton remains well placed to continue to benefit from our strong market positions in Ireland and the Netherlands and from a recovery in the UK merchanting market.  The Group continues to focus on optimising trading opportunities in its markets, on cost control and cash generation and has a strong balance sheet to support value enhancing acquisition opportunities.”