Grafton backs FY operating profit guidance, plans £50m share buyback

Building materials distributor and DIY retailer Grafton announced plans for a third share buyback programme of up to £50m on Thursday as it maintained its full-year operating profit guidance and said first-quarter trading was in line with expectations.

In an update for the period from 1 January to 23 April, the company said group revenue rose 2.8% from the same period a year earlier to £704m. It said trading in March was a little softer than expected, with sales of seasonal products in Ireland and the UK hit by wet weather.

In addition, volumes were lower than the same period a year earlier in its distribution markets in the UK, Ireland and Finland, but were ahead in the Netherlands.

Grafton said timber and steel price deflation contributed to a moderation in the rate of building materials inflation in its Irish and UK distribution businesses, while lower demand for plants and gardening products meant there was a small decline in revenue in the retailing business in Ireland.

Meanwhile, revenue growth in the UK manufacturing business was strong, driven by volume gains and the recovery of increased input costs.

"While we remain alert to macroeconomic headwinds impacting our markets, we are maintaining our operating profit expectations at this relatively early stage of the year," it said.

Grafton also said on Thursday that it plans to introduce a third buyback programme of up to £50m, reflecting its "confidence in the prospects for the group, strong balance sheet and cash generation from operations".