Grafton H1 profits dip as activity levels normalise

Building materials distributor and DIY retailer Grafton posted a jump in first-half revenues but a decline in profits on Thursday as activity levels normalised following the pandemic boost.

In the six months to 30 June, revenue rose 12.2% to £1.15bn, but adjusted pre-tax profit fell 3.6% to £143.4m and adjusted operating profit was down 4.4% at £151.1m.

The company pointed out there had been a notable rise in spending on the home in the same period a year ago as people focused on increasing indoor and outdoor living space, home working and less spending in other sectors during the pandemic.

It said trading patterns normalised in all of its markets in the first half of 2022, as building materials shortages and supply chain pressures eased.

Grafton hailed an "excellent" performance in its distribution businesses in Ireland and the Netherlands. However, volumes and profitability in the Selco division fell versus last year’s "exceptional" performance, it said.

There was also a normalisation of revenue and profitability in the Woodie's DIY, Home and Garden retail business.

The dividend was lifted 8.8% to 9.25p a share.

Chief executive Gavin Slark said: “Our first half performance saw a significant normalisation of activity levels following exceptional pandemic related spikes in trading in the first half of 2021. While inflation remains a continuing feature in our markets, we saw improved supply chain consistency as trading patterns normalised and building materials shortages eased.

“Though potential macro-economic headwinds remain, Grafton is uniquely placed to outperform given its leading market positions, geographic diversity and the relative resilience of its core repair, maintenance and improvement market. Given the strength of our brands and their market positions together with an exceptionally strong financial position, our focus remains on delivering a strong financial outcome for the year despite the uncertainties in our markets."