Grafton Group plc (LSE:GFTU) saw its shares drop more than 6% on Thursday after the company flagged a loss of momentum in trading, despite delivering first-half results in line with market forecasts.
The building materials supplier reported £1.25 billion in revenue for the six months to June, up 10% year-on-year. However, like-for-like sales growth of 2.4% came in just shy of Stifel’s 2.6% projection, with analysts noting a modest deceleration in May and June.
Performance varied by region. Ireland led the pack with 3.7% growth in distribution and 7.6% in retail. Spain and the Netherlands followed, with gains of 6.9% and 2.8%, respectively. In contrast, the U.K. posted a meager 0.2% increase, supported largely by price adjustments amid ongoing weakness in volumes.
Finland was the weakest performer, declining 4.2%, though Stifel noted that management changes could help stabilize the market. Meanwhile, the group’s manufacturing division expanded 5.2%, helped by a rise in construction activity from housebuilders.
Despite the softer trends, Stifel reiterated its “Buy” rating on Grafton and held its 1,175p price target, implying an 18.1% upside from Tuesday’s close at 995p. The broker emphasized that the results aligned with both its expectations and broader consensus.
Looking ahead, management indicated it does not anticipate volume growth in 2025 and plans to closely watch trading patterns over the summer months.
Grafton, which generates 45% of its revenue from Ireland and Spain, continues to benefit from a robust balance sheet and recent acquisitions, according to Stifel.
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