Woodies owner Grafton sees revenue up 10% but global fears hitting European operations
For the six months ended June 30, Grafton's group revenue rose 10.1% to £1.25bn (€1.45bn), in line with management expectations.
"Trading activity recovered strongly after a subdued start to the year however there was a slow down in momentum from mid-May and into June as a spike in geopolitical uncertainty appeared to dent consumer confidence in the period," said chief executive Eric Born. "Though we remain cautious about the timing of a broader recovery, particularly in the UK and Finland where markets remain challenging, we remain very well positioned to capitalise on our market leading positions as the cycle turns."
The firm said it is "actively managing costs to support margins".
Grafton's shares were down 8.5% to 910.2 at 9.47am in London after earlier falling as low to 902.9p and were among the top losers on London's mid-cap FTSE-250 index.
In Ireland, Chadwicks delivered like-for-like revenue growth of 3.7% in the period as trading activity continued to recover from the impact of Storm Éowyn in January. "The outlook for growth in the construction sector remains positive, supported by strong policy continuity and backing from the new Government to boost housing completions. However, persistent external challenges, including planning delays, utility connection issues, and labour shortages, continue to constrain the pace of supply expansion," the firm said.
The integration of HSS Hire Ireland is underway with initial trading in line with expectations. "We successfully completed the bolt-on acquisition of HSS Hire Ireland in the first half of the year which will broaden the offering of our Chadwicks business in the Republic of Ireland," said Mr Born.
The firm's Woodie's DIY, Home and Garden business in Ireland had a strong start to the year with average daily like-for-like revenue up 7.6% in the period helped by growth in both the number of transactions and average transaction values. "Woodie's focused customer proposition supported strong growth across its business as consumer spending remained resilient in Ireland despite macroeconomic uncertainties. Favourable weather conditions underpinned a particularly strong performance in plants and garden related products with some seasonal demand pulled forward into the spring trading months."
Construction markets in Europe have been pressured by persistent weakness as rising inflation levels and affordability challenges have dampened construction activity and kept people away from buying new homes or investing in non-essential upkeeps. US tariffs on materials are also adding to challenges.
Its UK business has been "challenging" with average daily like-for-like revenue in the UK 0.2% higher in the period. Repair, maintenance, and improvement (RMI) "demand remains soft, especially in and around the London area, as consumer confidence remains weak. However, the medium-term fundamentals remain positive, underpinned by the UK government's plans to significantly increase new housing activity."
In the Netherlands, average daily like-for-like revenue increased by 2.8% during the period, primarily driven by strong branch-related sales supported by growth from sales to national key accounts.
In Finland, IKH's average daily like-for-like revenue declined by 4.2% in the first half, with performance significantly weaker in May and June.
In Spain, the integration of natinoal distributor Salvador Escoda continues to progress, and average daily like-for-like revenue in the period was up 6.9%.
'The integration of our platform acquisition, Salvador Escoda, in Spain is progressing apace, with continuing scope to leverage its scale and national presence in what remains a highly fragmented market."
Despite the headwinds, Grafton said its medium-term outlook remained positive, as it is banking on a boost from housing shortages and a potential recovery in repairs, maintenance and improvement activity. 'We continue to actively evaluate growth opportunities in all our markets and to strengthen our position both organically and, where appropriate, by acquisition using the strength of our free cash flow conversion and balance sheet.'
Last week, rival SIG said that demand was "well below historical levels", and said it remains cautious about the potential for a recovery in the second half of the year.
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