Woodie’s DIY and Chadwicks owner Grafton Group has reported lower revenues and profits for the six months to the end of June due to weaker market conditions outside its home market of Ireland.
Grafton said it half year revenue fell by 4.4% to £1.137 billion from £1.189 billion the same time last year, while its profit before tax dropped by 23.4% to £71.7m from £93.6m.
The company added that basic earnings per share were down almost 17% to 28.4 pence from 34.2 pence.
It has declared an interim dividend of 10.50 pence per share, an increase of 5% on last year’s interim dividend of 10 pence.
Grafton said its Woodie’s DIY, Home and Garden business in Ireland, which operates from 35 stores, had a positive start to the year on the back of the improvement in sentiment as cost-of-living pressures eased and with the future economic outlook remaining positive.
It noted that average daily like-for-like sales were up 6.6% in the first quarter, while sales were marginally weaker in the second quarter with a decline of 1.8% against a strong comparative last year.
It noted that poor weather in the period affected sales of seasonal products such as garden furniture and related products but overall there was a first half like-for-like improvement in sales of 1.4%.
Grafton said that H1 revenue growth of 2% at Woodie’s, in constant currency, was supported by an increase in the number of transactions by 2.4% which was offset by a marginal decline of 0.4% in average transaction values.
The strongest performing categories were decorative products, homewares and building products but despite a good start to the year in the important gardening category, the exceptionally wet weather in Ireland has continued to impact demand.
Meanwhile, its Ireland Distribution business, Chadwicks, reported a positive trading performance in the first half of the year with overall average daily like-for-like revenue up 0.5% and volumes up by about 5.4%.
After a decline in average daily like-for-like revenue of 0.2% in the first quarter of 2024, which was largely driven by poor weather conditions, the business saw a resumption of growth to 1.1% in the second quarter.
Grafton said the business encountered overall materials price deflation of about 4.9% in the first six months of the year, as the deflationary pressures in timber and steel moderated.
The company said the overall outlook for growth remains positive for construction in Ireland, supported by Government backed investment of over €5 billion and build targets for new homes over the next five years increasing to 250,000, on the back of just over 32,000 home completions in 2023.
But average daily like-for-like revenue in the UK Distribution business was down by 7.7% in the first half as a result of the weak trends experienced in the Repair, Maintenance and Improvement (RMI) market together with the effects of price deflation.
The first half of the year followed the trend of the second half of 2023 with both price deflation and pressure on UK volumes.
Grafton noted that lower levels of demand across the construction sector, particularly in new housebuilding, led in turn to the RMI sector becoming more price competitive.
Meanwhile, in the Netherlands, lower revenue from timber factories and from smaller customers were largely offset by revenue growth generated by larger construction projects.
The slowdown in the Finnish economy and construction sector continued to impact volumes in IKH, which performed well against the overall Finnish market, it added.
Eric Born, Grafton’s chief executive, said the company had seen a “robust” first half performance despite challenging conditions in several of its markets.
“We are pleased with the performance and outlook of our Irish businesses in particular, and we continue to drive efficiencies and innovations in our other markets to capitalise on what we see as significant positive operating leverage opportunities as these markets turn,” the CEO said.
“Whilst uncertainties remain in the short term, 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,” he said.
“At this point in the year, with the important Autumn trading season yet to come, we continue to anticipate delivering adjusted operating profit for 2024 in line with analysts’ expectations,” he added.
Eric Born said the company has continued to be highly cash generative through a challenging period in the cycle, which has enabled it to return cash to shareholders whilst preserving a strong balance sheet to invest in organic and inorganic development opportunities.
“We continue to actively pursue opportunities to strengthen our existing market positions as well as platform acquisitions, and we remain optimistic that we can execute on some of these opportunities in the near term,” he added.