A combination of organic growth and acquisitions has helped building materials supplier Grafton (GFTU) move closer to achieving its medium term financial objectives.
Adjusted operating profit margins grew from 6 per cent to 6.6 per cent - not far short of its 7 per cent target - while the return on capital employed moved up from 13.6 per cent to 15 per cent. Trading conditions in the UK repair, maintenance and improvement market (RMI) remained subdued, but Grafton was boosted by the acquisition of Leyland in February 2018.
However, the real growth came from outside the UK - specifically Ireland - where a buoyant house building sector helped lift underlying operating margins from 8.5 per cent to 9.4 per cent. Woodie’s, the leader in the DIY, home and garden market in Ireland, also benefited from a strong summer trading period that pushed operating margins up from 6.2 per cent to 8.5 per cent. Disposals raised £23.8m, and £147.4m was committed to acquisitions and capital projects, although strong cashflow meant that net debt fell from £62.9m to £53.1m.
Analysts at Peel Hunt are still forecasting adjusted pre-tax profits for 2019 of £184.9m and EPS of 63.4p, moving up to 67.1p in 2020.
| GRAFTON (GFTU) | ||||
| ORD PRICE: | 785.5p | MARKET VALUE: | £ 1.87bn | |
| TOUCH: | 785-786p | 12-MONTH HIGH: | 846p | LOW: 626p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 545p* | NET DEBT | 4% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 2.08 | 101 | 34.4 | 10.8 |
| 2015 | 2.21 | 120 | 41.6 | 12.5 |
| 2016 | 2.51 | 114 | 39.6 | 13.8 |
| 2017 | 2.72 | 154 | 54.0 | 15.5 |
| 2018 | 2.95 | 181 | 63.3 | 18 |
| % change | +9 | +17 | +17 | +16 |
| Ex-div: | 07 Mar | |||
| Payment: | 05 Apr | |||
| *Includes intangible assets of £726m or 305p a share | ||||
