Grafton’s UK merchanting business increased turnover by 5% to €712.7m (2010: €678.5m). Average daily like-for-like turnover increased by 4.7%. Operating profit before restructuring costs increased by 14.1% to €31.9m (2010: €27.9m). The UK operating margin improved to 4.5% from 4.1%.
The company said that “trading in the half year was set against the backdrop of softening economic growth”. It added: “Uncertainty over the prospects for the UK economy contributed to low consumer confidence and weakness in the housing market. House prices were under downward pressure and housing transactions, which influence demand in the merchanting market, weakened in the half year.”
Selco Builders Warehouse, the trade-only builders merchant, reported strong growth in turnover and operating profit. The business opened of its 29th branch at Catford, South London. Two further store openings in London are scheduled for early next year, bringing the total in the capital to 16. Later this year a new branch will open in Slough and relocation of the Swansea and Minworth, Birmingham branches will expand the capacity of both stores.
In Northern Ireland, turnover in the Macnaughton Blair business stabilised against the background of a fragile recovery in economic growth. Initiatives to improve the gross margin and continuing cost reduction measures resulted in a significant increase in operating profit, the board said.
Turnover in the Irish merchanting business fell 7.2% to €149.4m (2010: €161.0m). The business returned to profitability in the second half of 2010 and despite the decline in turnover achieved an operating profit (before restructuring costs) of €1.0m in the first half of 2011 compared to a loss of €500,000 in the first half of 2010, to a cost reduction programme.
Group revenue was up 3% to €1,008m, up from €979m in the first half of 2010, and pre-tax profit was up 13% to €15.1m (2010: €13.4m).
Chief executive Gavin Slark said: "The group is well placed to deal with the continued difficult trading conditions in our core markets. A number of self-help initiatives have been identified that will enable us to improve our performance in margins, costs control and cash generation. This leaves us in a strong position to take advantage of any economic upturn or expansion opportunities."
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