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Grafton Group sees underlying earnings topping analysts’ expectations after solid full-year trading

In a trading update for the full-year ended 31 December, the FTSE 250-listed firm said its group revenue for 2018 was £2.95bn, an increase of 8.7% from the £2.72bn reported in 2017
DIY
However, the owner of Selco added, as expected, the rate of growth moderated in November and December following above-trend growth in September and October

Grafton Group PLC (LON:GFTU) saw its shares rise on Friday after the international builders merchanting and DIY group reported solid full-year trading and said it anticipates underlying earnings (EBITDA) to top analysts’ expectations.

In a trading update for the full-year ended 31 December 2018, the FTSE 250-listed firm said its group revenue for 2018 was £2.95bn, an increase of 8.7% from the £2.72bn reported in 2017. 

READ: Selco owner Grafton Group reveals “strong” first-half performance

The Ireland-based firm said its revenue growth in constant currency was 8.4% and average daily like-for-like revenue increased by 4.3%.

However, the owner of Selco and Leyland SDM added that, as expected, the rate of growth moderated in November and December following above-trend growth in September and October.

It said: “With a good performance over the year, the Group anticipates reporting EBITA for 2018 slightly ahead of the top end of analyst expectations*.

Gavin Slark, Grafton’s chief executive officer commented: "The Group continues to benefit from its exposure to multiple geographies and its diverse customer base."

He added: “The Group's cash generative businesses, strong balance sheet and low level of net debt support our development strategy for the year ahead."

Grafton Group said it will announce its full-year results for 2018 on 28 February 2019. It said its own compiled analyst forecasts show consensus EBITA for 2018 of £185.1mln, with the top end of the range £188.5mln.

In early morning trading, Grafton Group's share units were 2.6% at 718p.

In an initial note to clients, analysts at Peel Hunt said: “Given the business mix, Grafton is better placed to deliver growth than the pure UK merchants. However, with a slowdown in trade in November/December, it is too difficult to call the growth rate for 2019.”

They added: “While there is little to do to meet our forecasts, we’re remaining prudent given the backdrop. Trading on a PE of 10.9x and with a strong balance sheet, the shares are a solid Hold.”

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