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Highlights
Adjusted operating profit rose 9.5% year-on-year to £91 million in the first half of 2025, supported by the contribution from Salvador Escoda.
Net cash of £245.8 million before lease liabilities underpins growth strategy, with a £25 million share buyback set to commence.
UK Distribution returned to profit growth for the first time since 2021, while Ireland and Spain delivered positive performances.
Grafton Group plc (LSE:GFTU), the international building materials distributor and DIY retailer, today announced its half-year results for the six months ended 30 June 2025, reporting growth in profitability, cash generation, and shareholder returns.
Financial Performance
Adjusted operating profit increased by 9.5% to £91.0 million (H1 2024: £83.1 million), in line with expectations. The improvement was largely supported by the contribution from Salvador Escoda, the Spanish HVAC distributor acquired in 2024. Gross margin rose by 60 basis points, offsetting inflationary and labour cost pressures.
Group operating margin remained steady at 7.3%, with adjusted return on capital employed at 10.9% (H1 2024: 11.1%). Adjusted earnings per share rose 6.5% to 35.5p (H1 2024: 33.4p).
The balance sheet remained robust, with £245.8 million of net cash (before lease liabilities). This position provides capacity for organic expansion and acquisitions. A new £25.0 million share buyback programme will begin, funded by free cash flow. The interim dividend was increased by 2.4%.
Operational Developments
The integration of Salvador Escoda is progressing well, enhancing Grafton’s presence in the Iberian market. Ireland continued to deliver positive results, supported by Chadwicks and Woodie’s, while the acquisition of HSS Hire Ireland added further capability to the hire division.
In the UK, Distribution returned to profit growth for the first time since 2021 despite a challenging repairs, maintenance, and improvement (RMI) market. Activity in the Netherlands remained subdued, while in Finland the management team is focused on positioning the business for eventual market recovery.
Outlook
The Group expects full-year adjusted operating profit to be broadly in line with analysts’ forecasts, with the key autumn trading period still ahead. Trading momentum slowed in mid-May and June but returned to growth from July through August, with average daily like-for-like revenue up 2.3% compared with the prior year.
Positive trading conditions are expected to continue in Ireland and Spain. In Ireland, construction activity is forecast to remain steady, supported by government housing and infrastructure initiatives under the revised €112 billion National Development Plan. Spain is expected to see construction sector growth of 3-4% in 2025, driven by economic conditions, foreign investment, and rising building permits, with HVAC demand positioned for expansion.
In the UK, near-term demand for home improvement remains uncertain, although higher household savings and structural housing shortages are anticipated to support recovery over the medium term. The Netherlands has yet to show significant recovery, while in Finland, operational improvements are being implemented in anticipation of a rebound in 2026.
