Grafton profits slip on weaker UK economy
A weakening UK market in the second half of the year saw UK builders merchanting group Grafton reported a slight fall in profits on Thursday.
The company said pre-tax profit fell to £172.6m, from £174.4m as revenue rose 3% to £2.7bn.
"Strong organic growth in our merchanting and retailing operations in Ireland and in the profitability of our Netherlands operations helped offset a challenging year in the UK due to political and economic uncertainty," said chief executive Gavin Slark.
"The outlook for 2020 is of continuing but moderating growth in Ireland and the Netherlands and while reduced uncertainty may lead to some uplift in the UK repair, maintenance & improvement market, we remain cautious about the speed of any recovery.”
Grafton said the outlook for the Irish economy continued to be favourable with some moderation in growth anticipated from the high levels of recent years.
With the Irish economy recovering after years of austerity growth in domestic demand was expected to be driven by gains in employment and incomes which Grafton said should be positive for its merchanting and DIY businesses.
“Growth in house building is likely to be constrained by affordability relative to incomes and availability of mortgage finance,” the company said.
In the Netherlands, economic growth was forecast to continue to moderate due to weaker exports while domestic demand was expected to be supported by tax cuts and growth in real wages, it added.
For the period from January 1 to February average daily like-for-like group revenue decreased by 0.4% made up of a decline 1.5% in UK merchanting, 2% growth in Irish merchanting, a 1.3% rise in Netherlands merchanting, a fall of 0.3% in retailing and growth of 6.75 in manufacturing.