Grafton (GFTU) increased underlying pre-tax profit by 43 per cent to £110m in 2014, as the builders' merchant benefited from strong UK growth in the repair, maintenance and improvement segment, as well as the new-build housing market.
Performance metrics provided further evidence of the improved trading climate, with the underlying profit margin up from 4.1 per cent to 5.3 per cent. Solid cash generation of £160m helped the group to nearly halve net debt to £75.3m - the lowest level for 15 years - while the dividend was lifted by over a quarter.
On the merchanting side - which accounts for 90 per cent of group revenue - Grafton exploited its significant operational gearing. Although turnover for the business segment rose by 10.6 per cent to £1.87bn, operating profit grew by over a third to £110m. Crucially, the Irish market finally started to gain traction, with merchanting revenue up by 6 per cent at £258m. In constant currency terms this was even stronger at 11.7 per cent.
Analysts at broker Numis Securities are forecasting pre-tax profit for the current year of £122m and EPS of 40.9p.
| GRAFTON (GFTU) | ||||
|---|---|---|---|---|
| ORD PRICE: | 750p | MARKET VALUE: | £1.74bn | |
| TOUCH: | 749-750p | 12-MONTH HIGH: | 760p | LOW: 527p |
| DIVIDEND YIELD: | 1.4% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 388p* | NET DEBT: | 8% | |
| Year to 31 Dec | Turnover (€bn) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2010 | 2.00 | 26 | 27.7 | 7 |
| 2011 | 2.05 | 10 | 1.1 | 7.5 |
| (£bn) | (£m) | (p) | (p) | |
| 2012 | 1.76 | 25 | 13.6 | 7 |
| 2013 | 1.90 | 68 | 26.8 | 8.5 |
| 2014 | 2.08 | 101 | 34.4 | 10.75 |
| % change | +10 | +50 | +28 | +26 |
Ex-div: 19 Mar Payment: 17 Apr £1=€1.387 *Includes intangible assets of £486m, or 209p a share | ||||
