Grafton's third quarter revenue rise 'satisfactory'

Builders merchant Grafton said that its performance in the third quarter was “satisfactory” as revenues grew in the UK, Ireland, and Belgium, while operating profit was in line with expectations

In an update for the quarter ended 31 October, total like-for-like daily revenue for the FTSE 250 company rose 2.8%.

In the merchanting business, which accounts for 92% of the company's total revenue, LFL revenue in the UK increased 1.2%, Ireland 11.4% and Belgium 5%.

The merchanting business, trading principally under the Buildbase and Plumbase brands, is being restructured as it has been experienced pricing pressure.

The Selco brand opened branches in Wolverhampton and Portsmouth in September and Mitcham in October, and will opening branches in Croydon and Wembley in December, which will increase the branch network to 47 by the end of the year, slightly ahead of plan.

The surge in revenue in Ireland was driven by growth in the residential repair, maintenance and improvement market, new infrastructure projects, increased spending on commercial properties and a gradual recovery in house building.

In the Netherlands merchanting business, which was bought in November 2015, benefitted from growth in the wider economy and a recovery in the new housing and repair, maintenance and improvement markets.

In Belgium, the market was impacted by subdued economic growth and softer demand in the residential new build and repair, maintenance and improvement markets.

In retailing, revenue was up 4% as Woodie's DIY generated good like-for-like growth in Ireland from gains in employment and disposable incomes.

Revenue from the manufacturing business climbed 7.5%, as the mortar manufacturing business experienced a resumption of volume growth in the UK, due to demand for new homes, supported by measures to increase supply and low interest rates.

Meanwhile, revenue for the 10 months to 31 October increased by 12.8% to £2.11bn, compared to last year, or 10% on a constant currency basis.

Chief executive Gavin Slark said: "The group had a satisfactory performance in the period with development activity focused on expansion of the Selco branch network in the UK.

“The Irish and Netherlands businesses performed well and are attractively positioned to benefit from a relatively early stage recovery in the economic cycle and underpin the benefits to the group of exposure to multiple markets."

Shares in Grafton were up 3.91% to 557.50p at 0833 GMT.