Grafton shares jump as crash-out Brexit threat lifts
Shares in Irish building products provider Grafton Group jumped more than 5% after it said its 2019 profits are likely to be better than expected.
Grafton is viewed as the ultimate Brexit bellwether stock given its building merchants operations across Ireland, the UK and the Netherlands.
More than 90% of annual group revenues come from its UK builders’ merchanting operations.
In a pre-close trading update, ahead of publishing its 2019 annual results at the end of next month, Grafton said group revenue from continuing operations rose by 2.7% last year to £2.67bn (€3.1bn).
The group — which also owns the Woodie’s DIY retail chain here — said it expects adjusted operating profit for the year to amount to around £202m.
That would be 4% better than Davy had expected, and Goodbody also saw the strong finish to the year as a “positive surprise”.
“We are well-placed to continue to successfully implement our development strategy, supported by very cash-generative businesses and a strong balance sheet,” said Grafton chief executive Gavin Slark.
Ireland proved a strong market for Grafton in 2019; its merchanting business here growing revenue by 6.2% and Woodie’s sales ahead by 4.7%.
Total revenue in Grafton’s UK merchanting business fell by 1.1% last year, as British households continued to be cautious about discretionary spending.
Grafton said the weakness seen in the UK in September and October continued into November and December, but did not deteriorate further as the threat of a no-deal Brexit faded.
“While we remain cautious about the timing of any recovery in the UK merchanting market, our expectations for 2020 are positive for the overall group,” said Mr Slark.
