Building materials merchant Grafton built on its recovery last year as underlying operating profits rose by 13 per cent to €54.7m (£45.7m). In fact, profits have now doubled over the past two years, and the dividend is up 50 per cent, albeit it is still half the level seen in 2008.
But don't expect much in the way of growth this year, with Davy Research forecasting flat operating profits of €57m-€58m due to the subdued trading environment. In response, management has been reducing overheads in the face of excess capacity, notably in the Irish operation. This resulted in a one-off €12.7m exceptional cost to reduce the cost base by €6m in the current financial year. There was also a €19.4m charge in respect of a number of onerous leases and asset impairment, primarily in the Irish retailing business which led to the fall in reported profits.
As expected, trading conditions in Ireland remain subdued although the pace of contraction slowed and merchanting turnover was down 6.4 per cent at €306m, while steps to cut the cost base helped lift profits by 12.5 per cent to €4.1m. The much larger UK operation benefited from increased activity and revenues and profit from merchanting branches rose 4 per cent to €1.46bn and €59.9m respectively.
| GRAFTON (GFTU) | ||||
|---|---|---|---|---|
| ORD PRICE: | 322¢ | MARKET VALUE: | €747m | |
| TOUCH: | 320-323¢ | 12-MONTH HIGH: | 362¢ | LOW: 227¢ |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | na | |
| NET ASSET VALUE: | 424¢* | NET DEBT: | 23% | |
| Year to 31 Dec | Turnover (€bn) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2007 | 3.21 | 236.0 | 86.2 | 22.0 |
| 2008 | 2.67 | 64.1 | 25.1 | 15.0 |
| 2009 | 1.98 | 13.6 | 5.8 | 5.0 |
| 2010 | 2.00 | 25.6 | 27.7 | 7.0 |
| 2011 | 2.05 | 10.3 | 1.1 | 7.5 |
| % change | +2 | -60 | -96 | +7 |
Ex-div: 14 Mar Payment: 13 Apr £1=€1.20 *Includes intangible assets of €568m, or 245¢ a share | ||||
