- Organic growth crimped by strong prior-year sales
- Overall growth lifted by recent acquisitions
- Both firms maintain full year guidance
Builders merchant Grafton (GFTU) said it continued to see strong demand for construction materials through the first half of the year despite obvious signs of a slowing economy.
Similarly, landscaping products maker Marshalls (MSLH) said it had seen strong trading in the first half helped by its acquisition of Marley.
Grafton shares drifted off 4% to 731p while Marshalls ticked up 0.6% to 454p.
BOOST FROM M&A
Like-for-like sales for both firms were ahead of strong comparisons in the same period last year, with Grafton reporting 3.4% growth and Marshalls reporting a 7% increase.
However, most of the growth came from acquisitions with Grafton showing total first half revenues up 13.9% and Marshalls enjoying a 17% increase.
Grafton has been busy buying bolt-on businesses in the UK, Ireland, Finland and the Netherlands, while Marshalls acquired UK roofing firm Marley which has traded strongly in the first two full months of its ownership.
Analysts and investors initially questioned the logic of the Marley deal but the positive reaction to today’s update against a weak market backdrop would suggest opinions have changed.
Marshalls will hold a capital markets day in September which will include an update on its five-year plan and a ‘deep dive’ on the Marley deal.
GUIDANCE MAINTAINED
While noting ‘some unwinding of higher-margin revenue from retail customers’ in the UK and Ireland compared with last year, which saw an unprecedented surge in demand for home and outdoor space improvements, Grafton said it saw no reason to adjust its full year profit expectations.
‘The group’s overall trading performance was good against a very strong comparator in the first half of last year and our operating profit expectations for the full year are unchanged’, said chief executive Gavin Slark.
‘Notwithstanding current macro-economic risks, our portfolio of resilient high performing businesses has the flexibility to adapt to changing circumstances and is well positioned to outperform’, he added.
Marshalls also confirmed that its forecasts for the current financial year were in line with its previous guidance and market expectations.
