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Grafton expands with Spanish firm acquisition

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Grafton Group has acquired leading Spanish building materials distributor, Salvador Escoda, as the firm’s Irish division continues to see a good performance and growth in its latest trading update.

Eric Born, Grafton chief executive. Credit: Grafton Group PLC

The building materials distributor and DIY retailer saw revenue in the period from 1 January 2024 to 20 October 2024 fall 3.7 per cent to £1.82 billion from £1.9 billion the same period the previous year.

The firm claimed its full year adjusted operating profit is anticipated to be broadly in line with expectations.

In its latest half year results, Grafton generated a pre-tax profit of £71.3 million, 23.4 per cent less than H1 2023 at £94.3 million and an operating profit of £71.3 million (H1 2023: £94.3 million).

The company cited its Irish division as its “best performing”, while trading in UK and Finland remains challenging with little discernible seasonal improvement in volumes

Eric Born, CEO, said: “We continue to be pleased with the performance of our Irish businesses where the outlook for growth remains positive. Elsewhere, market conditions remain challenging, particularly in the UK and Finland. 

“The Group remains well positioned to capitalise as markets turn and we retain a tight focus on costs and efficiencies. 

“Whilst the recovery in certain markets, particularly the UK & Finland, remains slow, we are confident that our medium term outlook remains positive, supported by strong demand fundamentals, not headwinds from our euro denominated businesses, we anticipate delivering adjusted operating profit for 2024 broadly in line with analysts’ expectations.”

Grafton’s half year results coincide with the acquisition of Spanish air conditioning, ventilation, heating, water and renewable products distributor, Salvador Escoda.

Grafton will pay a maximum of €132 million on a cash and debt free basis, with €128 million payable at completion and €4 million extra subject to financial performance.

The company was founded in 1974, headquartered in Barcelona, operating from 93 branches in Spain which are supported by four distribution centres.

Spain is the fourth largest construction market in the EU and is forecast to have one of the fastest growing economies in Western Europe over 2023 – 2026.

Born added: “Salvador Escoda is an excellent fit with Grafton’s strategy of acquiring platform businesses in new markets which possess strong and unique propositions with the opportunity to drive further growth and scale. 

“We see long term structural growth in the Spanish economy and in its fragmented distribution markets for building and construction products. 

“Salvador Escoda’s leading own brands in categories such as ventilation and air conditioning are an exciting new adjacent channel for Grafton. 

“In addition to today’s announcement, we continue our patient, methodical assessment of additional organic and acquisition opportunities in our chosen European geographies, and in particular founder-run businesses, attracted by Grafton’s entrepreneurial pedigree and supportive, decentralised structure.”

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