Grafton Group profits jump

Grafton Group profits rise by 62% as improving Irish sentiment encourages DIY.

Man carrying building materials
Source: Bloomberg

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.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Find articles by analysts

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.