Dublin-based building materials specialist Grafton (GFTU) adds 3.9% to 694.5p on better-than-expected full-year results. The £1.54 billion cap ground out a 35% rise in taxable profits last year and investors clearly like today's upbeat outlook comments too.


Web chart - Grafton Group

Revenue for the group, which does most of its business in the UK (around 75%) and Ireland (around 23/24%) and has a small presence in Belgium, grew 8% to £1.9 billion in the year to 31 December. Operating profit rose 27% to £77.2 million while profit before tax came in at a healthy £64.9 million, up 35% year-on-year.


Chief executive Gavin Slark tells Shares he is particularly encouraged by growth in the UK segment in 2013 and that like-for-like sales for January and February already point to this encouraging performance continuing in 2014.


Slark is also keen to point to early signs of recovery in Ireland where construction activity is still struggling to claw its way back up the cliff it fell off in 2008. Grafton says that 'trading conditions in the merchanting business in Ireland stabilised in the first half and in the second half showed a return to growth and a significantly improved result was achieved from a low base following the restructuring and self-help measures implemented in 2012.'


The group's progressive dividend policy is another bright spot in the Grafton firmament; the second interim dividend rises 22% to 5.5p, taking the total dividend up 21% to 8.5p. As testament to the group's strong cashflow, dividend cover increased from 2.2 times to 2.6 times while Grafton ended the year with net debt of £133.7 million, its lowest level since 2001.


Slark says the key metric to watch at the half-year mark will be margins, where an improvement of 60 basis points was achieved in 2013. The CEO is confident similar improvements can be achieved in 2014.

Issue Date: 05 Mar 2014