Grafton, the Irish-based merchant and DIY chain, said it was too soon to judge whether improved demand seen in the UK so far this year would continue in the teeth of cuts in government spending.
The group reported significant recovery in the first half of 2010. A relatively stable turnover of €978.7m generated €14.8m in operating profits against a loss of €8.3m last year. This was due mainly to restructuring and netted pre-tax profits of €13.4m, compared with €3.7m in 2009.
The UK business, which includes the Buildbase chain and Jacksons, benefited from an economy that continued to emerge from recession following sharp volume declines over the previous two years, the company said.
Merchanting turnover in the UK increased by 5% to €678.5m and operating profits more than doubled to €27.9m.
The company said the UK economy grew over the first half of 2010 at a rate that was close to its long-run average and the overall outlook has improved. Signs have emerged of consumer sentiment softening due to concerns about cuts in government spending.
“It is too soon to judge whether this will translate into softer spending,” the company said.
“Losses in Irish merchanting were much reduced and operating profit in UK merchanting increased strongly,” said executive chairman Michael Chadwick. “The improved trends in group turnover were sustained in July and August, and we expect further profit improvement in the second half.”
