Shares in builders merchant Grafton Group PLC (LON:GFTU) gained on Wednesday after the firm reported strong revenue growth in the first four months of 2019.
In a trading update ahead of its AGM, the FTSE 250 company said revenues in the period had risen 6.1% to £962mln while like-for-like (LFL) revenue had grown by 6.4%.
Grafton said the performance had been driven by positive trading and “more favourable weather” compared to the same period last year, when a bout of freezing conditions in the UK caused by “The Beast from the East” dented business activity across multiple sectors.
The group had also seen its revenue affected by the disposal of two non-core UK merchanting businesses in the second half of 2018.
Gavin Slark, chief executive, said that going forward the company would “continue to benefit” from momentum in its Irish and Dutch businesses, which reported LFL growth of 10.7% and 3.5% respectively in the period.
However, he added that underlying demand in the UK Repair, Maintenance & Improvement (RMI) market remained “relatively subdued” and that the company would focus on realising benefits from investments made in its higher-margin businesses, which included Selco builders merchants and decorator supplies firm Leyland SDM.
In a note to clients, analysts at broker Liberum said that while the LFL growth had been ahead of the fourth quarter of 2018, they continued to worry that Grafton’s core UK business was vulnerable to “strengthening independents” and an “increasingly competitive” rival in Travis Perkins PLC (LON:TPK).
Liberum currently has Grafton at a ‘hold’ rating with a target price of 865p.
In mid-morning, Grafton shares were up 2.2% at 889p.