Woodie's DIY owner expects to beat profit targets

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Building materials group Grafton expects its 2018 earnings to come in at around £188m (€210m); an increase of approximately 16% on the previous year.

The update delivered a 4% boost to Grafton's share price, which has dropped by around 8% in the past 12 months.

The Woodie's DIY owner, which generates the bulk of its earnings from its UK merchanting business - said group revenue for 2018 rose by 8.7% to £2.95bn. This was despite a moderation in sales growth in November and December after an "above-trend" showing in the preceding two months.

The group said it expects 2018 earnings - on an Ebita basis - to come in "slightly ahead of the top-end of analyst expectations".

The consensus forecast, amongst analysts, is for Grafton to post annual earnings of just over £185m, but Davy expects earnings of £188m and said the final figure could even be closer to £190m.

Grafton's full 2018 results, due to be published at the end of next month, are expected to confirm that trading profits have risen by nearly 50% over the past three years.

The group saw across-the-board sales increases last year. Woodie's grew sales by nearly 10%, while there were respective rises of 7.7%, 9.3%, 18.7% and 2.2% in its UK, Irish, Dutch and Belgian merchanting divisions.

"The group continues to benefit from its exposure to multiple geographies and its diverse customer base," said Grafton chief executive Gavin Slark.

Grafton also sold two small non-core UK businesses, with combined revenues of £40m and earnings of around £1.4m.

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