Grafton Group looks at possible sale of some of UK business

Gavin Slark, CEO of Grafton Group

Ellie Donnelly Twitter Email

April 16 2021 10:53 AM

Grafton Group has appointed Rothschild & Co to undertake a review of certain parts of its traditional merchanting businesses in the UK.

In a statement on Friday Grafton said this may or may not result in the sale of “some or all of these businesses.”

The review is focused on the Buildbase, Civils & Lintels, PDM Buildbase, The Timber Group, Bathroom Distribution Group and NDI businesses.

No other businesses in the group will form part of the strategic review, according to the company.

“Grafton has been on a journey towards assembling a portfolio of higher margin operations with an increasing focus on non-traditional merchanting businesses,” Flor O'Donoghue, analyst at Davy, said.

He added that while there is no certainty of any disposals, if the review does lead to a sale, “it will represent a big change in the group’s composition.”

“We estimate the businesses under review have a revenue base of circa £1bn (€1.15bn), 35-40pc of Grafton’s overall turnover. Any sale would also bolster Grafton’s already very healthy financial position and would therefore further enhance its capital allocation options,” Mr O'Donoghue added.

Grafton trades from around 530 branches and has approximately 11,000 employees across Ireland, the UK and Netherlands.

Its portfolio of brands includes Chadwicks and Woodie's in Ireland, Selco, Buildbase, Leyland SDM, MacBlair, CPI EuroMix and StairBox in the UK, and Isero and Polvo in the Netherlands.

In February this year Grafton said it expects to increase investment in its digital offering following a surge in online customers.

In November last year, 50,000 online transactions were performed on the Woodie’s site – an increase of more than 800pc when compared to the 6,000 sales online in November 2019, Gavin Slark, CEO of Grafton Group, said in February.

Revenue from the Woodie’s arm of Grafton was £246.6m (€283.7m) last year – an increase of 17.5pc on the prior year, despite the chain being closed for 51 days during the first lockdown.

The performance benefitted from the large number of people working from home since the onset of Covid-19, which has seen increased investment in home improvement projects.

The company said 2020 was a year of “exceptional growth” for Woodie’s, that established new records for revenue, operating profit and the operating margin which increased by 600 basis points to 17pc, according to annual results.