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'Refocused' Woodie's boosts Grafton's half year

Published: 27 August 2014
Grafton Group, the builders merchanting and DIY business, achieved higher sales and profit in the six months to June 30 2014, helped by an improved performance from the Irish Woodie's DIY.
'Refocused' Woodie's boosts Grafton's half year
The group drove revenue up 11% to £1.02bn and underlying operating profit up 62% to £50.6m from £31.2m. Group operating margin hit 5.0%, up from 3.4% - a milestone, according to ceo Gavin Slark, who described it as "a key point in our journey from recovery to growth".

Underlying pre-tax profit jumped 88% to £45.9m from £24.5m.

The UK merchanting business performed strongly thanks to volume growth in the residential repair, maintenance and improvement market, while Irish merchanting showed strong operating profit growth as the market recovery gained momentum.

Retail revenue comprises just 8% of overall Grafton revenue, and it fell 1.4% to £79.6m but was but up 2.3% in constant currency. Like-for-like revenue increased by 3.2%. Operating profit rose to £0.4m from £0.2m, and underlying operating profit improved by £1.1m.

Woodie's DIY business, which operates nationally in Ireland from 37 stores, benefited from a significant improvement in consumer sentiment as the wider economy started to recover from the downturn of recent years.

Modest growth in retail sales volumes in the half-year reflected the fact that Irish shoppers were more willing to spend as disposable incomes stabilised.

This is a year of transition for Woodie's, which has a new chief executive and broader management team. Refocusing the business on its core strengths of DIY, home and garden has involved refreshing and updating ranges supported by a new marketing campaign and discontinuing non-core ranges.

Store layouts have also been changed to improve the shopping environment for customers. Product ranges have been more clearly defined and space has been allocated to kitchens and bathrooms in seven stores.

"The group remains committed to a growth strategy of organic initiatives and value-adding acquisitions," said Mr Slark. "We believe the overall outlook is positive, notwithstanding a slower rate of growth in the second half, and we are confident that the full year's trading performance will be at least in line with current consensus expectations."


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