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Grafton merchant arms offset retail losses

Builders merchants and DIY retailer Grafton saw a solid performance for the first half of 2011 as its trade businesses offset falls in consumer spending.

The company – which operates Buildbase, Plumbase, Jackson Building Centres and Selco brands – saw merchanting operating profit across the UK and Ireland increase by 22 per cent to £29.6 million in the six months to 30 June, with revenue up from £744m to £773.7m.

The UK merchanting business saw a 5 per cent  increase in turnover to £631.8m.

Chief executive officer Gavin Slark said:  “The group is well placed to deal with the continued difficult trading conditions in our core markets.”

In merchanting, the firm said its Buildbase business recorded strong turnover growth in its civils branches, servicing the new build market. Althgouh it said downward pressure on house prices and weakened housing transactions influenced demand.

Selco Builders Warehouse, the trade only builders merchants, reported strong growth in turnover and operating profit and opened its fourteenth London branch, with two more scheduled for the capital next year.

It said market conditions were stable in the East Midlands market, where Jackson’s improved its performance through a “continuing focus on cost reduction”. 

Plumbase turnover was boosted by the repair, maintenance and improvement market while the branch network increased to 198 with the acquisition of 16 plumbing and heating branches in England and Wales. 

In manufacturing, turnover was up by 6.5 per cent to £20.5m and the operating loss (before restructuring costs) dropped to £0.8m from £2m. With activity in the new housing market restricted by a lack of mortgage availability, it said it focused on opportunities elsewhere and secured contracts for the supply of materials to a number of infrastructure projects.

The group is the largest DIY retailer in Ireland, with brands Woodies and inhouse. Retailing made a £0.35m loss, compared with £1m loss last year, with revenue down from £103.7m to £99m, largely blamed on pressures on household budgets.

Overall group turnover increased by 3 per cent to £886m, with pre tax profit up 13 per cent to £13.4m. Restructuring costs reached £3.6m.
Net debt of £218m was £31.2m lower than the position at 30 June 2010, while the company also agreed a five-year £239.5m debt facility, maturing in 2016.



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