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Grafton Group’s revenues rise

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Building materials supplier and DIY company Grafton Group said its group revenue for the six months to the end of June came in at £1.55 billion.

This was up 46.5% on the same time last year when it was hit by temporary closure of branches, stores and manufacturing plants in the UK and Ireland except for the provision of materials to essential services

Group revenue was 18% higher compared to same time in 2019, it added.

In a trading update, Grafton said the strong revenue growth trends that developed in March and April were sustained in May and June led by Woodie’s in Ireland and Selco in the UK.

Grafton said it was raising its adjusted operating profit for the year in continuing operations to about £240m.

It added that all of its branches, stores and manufacturing plants were now fully operational after Covid enforced restrictions came to an end.

“The strength of our customer propositions together with good underlying demand in the residential repair, maintenance and improvement and new housing markets contributed to this very encouraging performance,” the company said.

But it noted pressure on supply chains caused by increased international demand for building materials, limitations on manufacturing capacity, a shortage of certain raw materials and container shipping logistics issues that hit the movement of goods internationally.

“These procurement challenges resulted in shortages of core building materials, an extension of delivery lead times, certain products being placed on allocation and a sharp increase in product price inflation across a range of categories in the UK and Ireland,” it added.

During the six month period, Grafton completed the acquisition of IKH in Finland and this month it announced the sale of its traditional Merchanting business in the UK for an enterprise value of £520m.

Gavin Slark, Grafton Group’s chief executive, said the company is making “significant progress” implementing its strategy in the period that resulted in agreement to divest the Traditional Merchanting business in Great Britain on favourable terms and completion of the value enhancing IKH acquisition in Finland.

“Grafton traded ahead of expectations in the first half and, despite some ongoing uncertainty caused by the pandemic and sector-wide supply chain pressures, the group has increased current year profit guidance for continuing operations supported by its market leading businesses and strong financial position,” he added.

Grafton said its Selco business in the UK performed strongly in the half year with average daily like-for-like revenue up 74.4% on the previous year, which was impacted by the closure of branches in late March and gradual reopening during May and June.

Average daily like-for-like revenue increased by 18.4% compared to the first half of 2019 reflecting the strong growth momentum from March up to the end of June which saw trading in the Regions outperform the Greater London Area.

The company that average daily like-for-like revenue in its Chadwicks branches in Ireland was down about 2% in the months to the middle of April compared to the same period in 2019 as branches traded at lower levels of activity supplying those parts of the construction sector that were permitted to continue operating.