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Grafton Group highlights positive start to year, but March freeze had significant impact on sales

The builders' merchant and DIY retailer still managed revenue growth of around 7% over the whole four-month period
snowy building site
Snow and ice put a 1.3% dent in sales

Selco owner Grafton Group Plc (LON:GFTU) highlighted a positive start to the year through January and February, whilst noting weaker trading in March as a result of the extreme weather caused by the ‘Beast from the East’.

The adverse weather conditions and unseasonably low temperatures through March and into early April had a significant impact, the builders’ merchant said.

It reduced the rate of growth in average daily like-for-like revenue to 1.3 per cent, Grafton added.

READ: Grafton's non-reliance on the UK a boon

Overall, in the four months to the end of April, the group said revenue increased by 7% to £907mln.

Grafton said its outlook remains positive and its full year expectations remain intact.

“We should continue to benefit from exposure to strong growth markets in Ireland and the Netherlands and, consistent with our view coming into the year, expect underlying demand in the UK RMI market to remain subdued but house building to perform strongly," said Gavin Slark, Grafton chief executive.

Liberum sees shares fairly valued

Liberum Capital analyst Charlie Campbell noted two negative comments in the trading updates - regarding high competitiveness in the UK, and, Selco’s slower like-for-likes.

“Two negative statements may have caught the eye of the market, on UK competitiveness and slower like-for-likes in Selco,” Campbell said.

“But in context, UK competitiveness is often cited, and the raised level may prove short lived, while Selco cannibalisation is in a sense deliberate as new branches add density to existing locations.

Campbell added: “We continue to see the shares fairly valued and leave estimates unchanged.”

** UPDATED to include analyst comments

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