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The UK and Irish manufacturer and building supplier has benefited from improving economies on either side of the Irish sea. The company has seen an 11% improvement in year-on-year revenue from £912 million in 2013, up to £1.01 billion in 2014. At the same time, pre-tax profit has jumped by 88% from £24.5 million up to £45.9 million.
Predominantly the business gets over 70% of its revenue from the UK and its sales to businesses, driven by the very strong housing market. The Irish arm of the business has also benefited from the improving levels of employment and a return of the DIY enthusiast.
Solid first-half figures have enabled the company to increase its dividend payments by 25% up to 3.75p, while at the same time reduce its net debt down from £149.8 million to £101.1 million — a fall of 33%.
The management has also stated its expectations that the company will be able to hit all of its full-year targets. The only note of caution should come from the more careful statements made from companies involved in the UK house building sector. Worries over the negative effect that will be felt when the Bank of England finally starts raising interest rates have seen many reassess its future outlooks.
In the short-term, shares in Grafton are overbought, however they are still some way of its 12-month highs just under the £7 level.