Belfast Telegraph

Shares in MacBlair parent company plunge after sudden profits warning

Gavin Slark
Gavin Slark

By Donal O'Donovan

Shares in the Irish parent company of builders' merchants MacBlair plunged as much as 12% after a profit warning yesterday.

Shares in the London listed, Irish headquartered Grafton Group said annual profits will miss expectations, blaming factors including the impact of Brexit uncertainty on the UK construction sector.

Grafton Group operates 16 branches of MacBlair around Northern Ireland.

Grafton shares lost as much as 12%, and its UK-listed peers including B&Q-owner Kingfisher all traded lower after the Irish group issued an unscheduled trading update to the market yesterday.

It warned that trading toward the end of the third quarter had been more difficult than anticipated. The company hadn't been scheduled to provide an update until November 12.

In the UK, merchanting business like-for-like revenue was 0.8% lower as households deferred discretionary spending against a backdrop of increased economic uncertainty.

While Irish growth remains strong in the merchanting business, the pace of expansion was less than forecast.

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"Against the backdrop of softer third quarter trends which have continued into October, the group currently expects to report full year operating profit for continuing operations in the range of 4% to 8% lower than current consensus," Grafton said.

That consensus forecast had been for profits of around £193.5m.

Chief executive Gavin Slark said the softer outlook reflected weaker market sentiment, rather than market fundamentals.

"Grafton remains well placed to continue to benefit from our strong market positions in Ireland and the Netherlands and from a recovery in the UK merchanting market," he said.

With the UK still facing Brexit uncertainties and amid a wider slowdown in global growth, a British construction slump deepened in September to contract at the fastest in around 10 years.

In May, a court ruling in the Netherlands on environmental grounds has delayed the granting of permits for new construction projects.

Around 18,000 projects in the Netherlands, worth billions of euro, risked being shelved after its highest court ruled that the way Dutch builders and farmers dealt with nitrogen emissions breached European law.

In July, Grafton had warned of "softer than anticipated" market conditions in an earlier trading update.

Grafton's profit warning follows weak manufacturing and service sector data across which has already started to rattle markets.

Belfast Telegraph