Grafton posts rise in earnings

Building supplies group Grafton Group Plc posted an 8 per cent rise in 2007 earnings, but the owner of Buildbase builders' yards in the UK warned slowing economies and a weak sterling would take their toll this year.

Grafton, which also owns Heiton Buckley builders merchants and Woodie's and Atlantic Homecare home improvement chains in Ireland, said operating profit in Ireland was down 5 per cent on the back of the slowdown in building.

Underlying earnings per share rose to 84.3 cents last year from 78.0 cents a year earlier.

That compared with an average analysts' forecast of 85.3 cents on Reuters Estimates. Sales in the 12 months to the end of December rose 9 per cent to €3.21 billion.

In Britain, where Grafton also owns bathroom and heating supplier Plumbase, revenue rose 14 per cent to €1.98 billion and operating profit increased 24 percent to 142.1 million euros thanks to "reasonable market conditions" and acquisitions.

In Ireland, Grafton's sales rose 2 per cent to €1.23 billion but operating profit dropped 5 per cent to €123.7 million as the company pointed to Ireland's weakening property market and the ensuing slowdown in house building.

"Overall these results are much as expected, with the slowing Irish housing market being felt in the second half of 2007 and the UK delivering impressive progress," NCB analyst John Sheehan wrote in a research note.

"Grafton faces the toughest conditions it has seen in many years in 2008 but we see it well placed to manage these challenges."

Grafton's shares, which have lost more than half their value since hitting a life-time high of 13.10 euros last February, were down 0.4 per cent at 5.21 euros in Dublin in early trading, broadly in line with a weaker Irish market.

Analysts expect group earnings to drop 16 percent this year as the company contends with the double-whammy of slowing economic growth and a weak sterling.

© 2008 ireland.com