Shares in Grafton Group PLC (LON:GFTU) climbed on Friday after the Irish builders’ merchant reported a rise in first-half profit.
For the six months ended 30 June, the FTSE 250 firm reported an operating profit of £97.7mln, up 6% on the prior year, while revenues rose 2% to £1.4bn.
The company said strong organic growth in its merchanting and retailing businesses in Ireland had helped boost its performance in the six months, while it also reported “good growth” in its Netherlands business after the acquisition of Dutch ironmonger Polvo.
The interim dividend was also hiked by 8% to 6.5p per share.
Looking ahead, Grafton said it expected continuing volume and pricing pressure in the UK merchanting market and was focused on self-help initiatives.
However, the company added that the outlook for its Irish market was “positive” and expected growth in its merchanting and DIY business, while the Dutch market was similarly expected to continuing growing.
“We made good strategic and operational progress in the first half of 2019 which supports the ongoing improvement in the underlying quality of our business”, said Gavin Slark, Grafton’s chief executive.
He added that despite the “uncertainty” in the UK, the group was continuing to benefit from the market position of Selco business in the country.
Peel Hunt ups to ‘add’
In a note, broker Peel Hunt upgraded the stock to ‘add’ from ‘hold’ and retained their 860p target price, saying that Grafton’s shares were the “cheapest” among the builders’ merchants.
Analysts added that the company benefitted from “diversified geographic exposure and strong market positions”.
In early trading, the shares were 5.5% higher at 720p.