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Selco success leads Grafton growth

31 Aug 17 Builders merchant group Grafton reports that it has successfully turned around its UK business after restructuring last year.

Selco says it is the UK's fourth-largest builders merchant
Selco says it is the UK's fourth-largest builders merchant

Grafton’s UK merchanting businesses grew their revenue by 4% in the first half of 2017 to £919.5m (2016 H1: £884.0m). Adjusted operating profit, excluding profit from property deals, was £50.1m (2016 H1: £46.9m).

“The traditional UK merchanting business reported good growth in profit and benefitted from the restructuring implemented in the last quarter of 2016,” the board said.

Selco Builders Warehouse reported double-digit revenue growth driven principally by the rollout of nine new branches so far this year. It consolidated its position as the UK's fourth-largest and fastest growing general builders merchanting model, Grafton said. 

Five new branches were opened in the first half of the year in Beckton, Crayford, Guildford, Camberley and Cardiff.  Since the end of June, four branches have opened in Thurrock, Warrington, Poole and Basildon.  Selco now trades from 56 branches and remains on course to open at least 11 new branches this year.

Selco also increased revenue from its Click & Collect and Selco Direct on-line services.

Buildbase also improved its operating profit and margin despite the weak pound resulting in increases in supplier prices.

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Plumbase revenue was lower due to the closure of branches last year following a strategic review of the business.  Like-for-like revenue increased by 4.9%.  “The overall result for the period saw an increase in operating profit from a low base due to improvements in operating efficiency, rationalisation of the branch network, customer initiatives and margin management.”

Buildbase Civils, a distributor of heavyside materials primarily to the residential new build and infrastructure markets, recovered strongly under new management, Grafton said.  “Strong revenue growth was supported by increased demand in the new housing market for groundworks materials and lintels.  There was a strong advance in operating profit that also benefitted from last year's restructuring.”

TG Lynes, a distributor to the mechanical services market in London and the southeast, benefited from building services contractors engaged in refurbishment and new build projects in the commercial, public sector and residential markets.   The small network of Plumbase Industrial branches that also operate in this market achieved improved results.

MacBlair, the Northern Ireland merchanting business, reported improved revenue and profit following investment in recent years.  Good gains were made in the general merchanting branches partly offsetting tighter trading conditions in the architectural ironmongery division.  The refurbished flagship branch in Belfast and the relocated branch in Lisburn performed well.

Overall, Grafton Group – which also operates in Belgium and the Netherlands as well as its home market of Ireland – made a pre-tax profit of £74.1m in the six months to 30th June 2017, up 18% on last year, on group revenue up 9% to £1,339m.

Chief executive Gavin Slark commented: "We are pleased to report that all geographies contributed to strong growth in revenue and double digit growth in profits and earnings per share in the first half.  This encouraging outcome leaves us well placed to deliver our full year expectations."

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