Grafton shares rise as FY25 outlook confirmed on trading recovery, buyback boost

Investing.com -- Shares of Grafton Group (F:GN5) rose on Thursday after the building materials distributor confirmed its full-year 2025 outlook on the back of a recovery in recent trading.

The company posted revenue of £1.25 billion in the first half, a 10.1% increase from a year earlier, with like-for-like sales up 2.4%. 

Adjusted EBIT rose 9.5% to £91 million, slightly ahead of expectations and accounting for 49% of consensus forecasts for the year. 

Adjusted earnings per share were 35.5 pence, a 6.5% increase, while free cash flow came in at £69 million, representing 52% of the annual forecast. Net debt stood at £147 million, higher than RBC’s estimate of £103 million.

RBC analysts said that despite challenges, the company’s results showed resilience. “Despite unhelpful macro conditions, Grafton continues to operate well given the circumstances,” they said.

Trading momentum picked up in July and August, when like-for-like sales rose 2.3% year over year, matching the pace of the first half. 

The improvement followed a slowdown in May and June, which had prompted a cautious trading update in July. Conditions remained uneven across markets. 

RBC highlighted that “Ireland and the Netherlands performed better against challenging conditions in the U.K. and Finland, in particular.”

The company announced a dividend of 10.75 pence per share, slightly below RBC’s forecast of 10.8 pence. It also extended its share buyback program by £25 million.

Going forward, consensus forecasts point to full-year 2025 sales of £2.51 billion, up 10% from a year earlier, with like-for-like growth of 2.2%. 

Adjusted EBIT is expected at £185.7 million. For 2026, consensus estimates project 4% sales growth and adjusted EBIT of £205 million. 

RBC noted that “despite a normalisation in trading, there is still a high level of caution heading into autumn trading and FY26.”

The brokerage emphasized Grafton’s financial position and growth prospects. “Balance sheet firepower and earnings recovery potential remain core to our investment case, with an expanding pipeline of M&A opportunities,” the analysts said.

Regional performance showed significant differences. In Ireland, like-for-like sales rose 3.7% in the first half and accelerated to 5.3% in July and August. 

The Netherlands also delivered steady improvement, with sales up 2.8% in the summer months. In contrast, the U.K. market remained subdued, with like-for-like sales barely positive at 0.2% in the first half and 0.5% in the summer. 

Finland continued to struggle, with sales down 4.2% in the first half and 9% lower in July and August.

“Cash generation and net debt continue to be solid,” the analysts said, noting that these factors support the group’s stability despite pressure in some markets.