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Grafton revenue inches up

Irish merchanting group Grafton reported revenue and underlying profits rose for the first six months of the year.

Sales across the group were up 4.6% to €1.05bn (£833m), with underlying operating profit up 19.3% to €31.3m (£24.8m).The proportion of Group revenue from the UK business increased to 76% from 72%.

The merchanting business in the UK performed strongly despite a decline in volumes in the residential RMI market as the UK economy slipped back into recession. A contraction in consumer spending and adverse weather conditions in the second quarter contributed to a decline in revenue in the Irish retailing business.

Revenue in the merchanting segment increased by 6.9% to €932.8m (£740.6m). Operating profit before restructuring costs was €38.9m (£30.8m), an increase of 16.4%.

Merchanting revenue in the UK increased by 9.5% to €780.5 m (£619.7m) with operating profit before restructuring costs up 18% to €37.5m (£29.77m).

The increase in UK merchanting turnover by 3.8 per cent comprised growth of 1.4 per cent in average daily like for like turnover, growth of 0.8 per cent due to an additional trading day and the net effect of new branches, acquisitions and branch consolidations which increased turnover by 1.6 per cent. The increase in average daily like for like turnover reflects a recovery of price increases and a measure of outperformance in a market that experienced a decline in volumes in the half-year.

Buildbase focused on increasing revenue and profitability in a challenging market that has experienced cumulative volume declines of over 30% in recent years. Plumbase increased revenue and profit, strengthened its market position through increased promotional activity, improved its gross margin and tightly controlled costs.

The seventeen branch specialist heating spares business was integrated into Plumbase and rebranded as Sparesbase.

The Jacksons business produced a satisfactory result having outperformed a weak market in the East Midlands. A new branch was opened in Worksop and redevelopment of the Grimsby branch was completed.

Selco Builders Warehouses, the trade-only builders’ merchant, reported good turnover and operating profit growth while continuing to develop a strong brand identity with trade customers operating in the residential RMI market. The business performed strongly in London where fifteen of its thirty one stores are located.

Last year’s store openings in Catford, South London and Slough, Berkshire traded in line with expectation. Development of the business continued in July 2012 with the opening of a store in Hanworth, South East London.

Later this year, the opening of a store in Tottenham, North London will improve the brand’s market penetration and enhance opportunities for realising scale-related benefits.

In Northern Ireland, economic activity was broadly unchanged due to weak consumer spending. Construction output stabilised but remains one third below the pre-recession peak in 2007.

Buildbase Civils & Lintels, the eighteen branch specialist heavyside business, grew turnover strongly with its house building, civil engineering and groundworks customer base and also developed a presence in the infrastructure market by securing long-term contracts to supply a number of roads schemes.

The drywall and insulation distribution branches that supply sub-contractors to the national and regional house builders were rebranded as NDI. The business performed strongly increasing volumes and operating profit. Plans have been developed to increase market coverage by utilising spare capacity in the existing merchanting estate to increase the number of NDI branches.

Frontline, a distributor of bathroom products increased revenue and profit through expanding its regional market coverage. www.plumbworld.co.uk, increased revenues strongly as the online share of the retail market continued to grow.

Gavin Slark, Chief Executive Officer said: “The Group continues to make good progress in markets that remain challenging and the outlook is still uncertain. The focus on self-help will continue to be at the forefront of our activities and the Group remains in a financially robust state.”

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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