Grafton pushed underlying operating profit ahead by 19 per cent to €31.3m (£24.8m) at the half-year stage, with a stronger performance from the building materials merchant's UK operation more than offsetting weakness in Ireland. Moreover, the UK business increased its proportion of group revenue from 72 per cent to 76 per cent. Meanwhile, strong cash flow helped reduce net debt by €125.3m in the half to €200.6m, and to support a dividend hike. However, with end-market demand remaining weak, there's little scope for a re-rating.
Merchanting, which generates 88 per cent of group turnover, pushed operating profits up 16.4 per cent to €38.9m, thanks to a 9.5 per cent increase in UK revenue to €780.5m. Operating efficiencies helped to boost this segment's operating margin from 4.47 per cent to 4.81 per cent, too. Costs were also cut in the Irish operation, but operating profits there still fell from €1.1m to €900,000. Moreover, turnover on the retailing side slipped 12.4 per cent to €98.2m, which widened last year's operating loss of €400,000 to €3.5m – the wet weather added to the economic gloom.
Broker Davy Research is maintaining its full-year EPS estimates at 17.5¢.
| GRAFTON (GFTU) | ||||
|---|---|---|---|---|
| ORD PRICE: | 317¢ | MARKET VALUE: | €735m | |
| TOUCH: | 315-320¢ | 12-MONTH HIGH: | 345¢ | LOW: 227¢ |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 308 | |
| NET ASSET VALUE: | 427¢* | NET DEBT: | 20% | |
| Half-year to 30 Jun | Turnover (€bn) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | 1.01 | 15.1 | 5.35 | 2.75 |
| 2012 | 1.05 | 17.1 | 5.28 | 3.00 |
| % change | +4 | +13 | -1 | +9 |
Ex-div: 5 Sep Payment: 5 Oct *Includes intangible assets of €578m, or 249¢ a share £1=€1.26 | ||||
