Grafton Group Reports Revenue Decline, Expands in Spain
Grafton Group, the Irish building materials distributor, reported a revenue decline of 3.7% in the year to October 20, reaching £1.82 billion. While the company saw a slowdown in the decline of average daily like-for-like revenue in the last four months, challenges persist in some economies.
Market Performance
The company highlighted differences in market performance across its operations. Ireland continued to show growth, while the UK and Finland witnessed a slow recovery. Despite this, Grafton Group remains confident in its medium-term outlook, driven by strong demand fundamentals for new housing and improving consumer confidence.
According to Grafton Group CEO Eric Born, “Whilst the recovery in certain markets, particularly the UK and Finland, remains slow, we are confident that our medium-term outlook remains positive, supported by strong demand fundamentals, not least in the demand for new housing as markets normalise and consumer confidence improves.”
Strategic Acquisition in Spain
To bolster its presence in a key growth market, Grafton Group announced the acquisition of Salvador Escoda, a leading distributor of HVAC and renewable products in Spain. The acquisition will strengthen Grafton Group’s position in a fragmented distribution market and capitalize on the expected structural growth in the Spanish economy.
The total consideration for the acquisition is a maximum of €132 million, payable in cash and debt-free. Salvador Escoda reported revenue of €231.8 million and adjusted operating profit of €16.5 million in the last year.
Born emphasized the strategic importance of the acquisition: “The fragmented nature of distribution markets in Spain, in addition to the expected long-term structural growth in the Spanish economy, provides a unique value creation opportunity for Grafton.”
Future Outlook
Despite facing challenges in certain markets, Grafton Group anticipates delivering adjusted operating profit for 2024 broadly in line with analysts’ expectations. This positive outlook is based on a combination of strong demand fundamentals, a gradual recovery in key markets, and strategic acquisitions like Salvador Escoda.
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