Grafton points to second-half recovery

The impact was most severe in the UK, where distribution revenue dropped by 30 per cent to £605m. With the adjusted operating profit margin collapsing to just 0.4 per cent, this translated to £2.6m of profit. In response to the weaker trading conditions, the business will be restructured in the second half and the group has registered a £16m exceptional charge to reflect this.

The smaller Netherlands business was a different story, with Grafton’s distribution activities being deemed an essential service and allowed to remain open. Benefitting from last year’s acquisition of ironmongery wholesaler Polvo, revenue increased by 70 per cent year-on-year to £138m.

Following the easing of the pandemic restrictions, Grafton has seen demand bounce back, most notably in its Irish distribution and retail operations. From the beginning of July to mid-August, the group’s average daily like-for-like revenue was up by 4 per cent on the previous year, with a 36 per cent increase from DIY, home and garden chain Woodie’s. Based on the current outlook, Grafton expects that adjusted operating profit for the second half will be similar to last year.

House broker Numis expects 2020 full-year adjusted operating profit will come in at £140m – versus £140m in 2019 – increasing to £178m in 2021.