Grafton sees recovery sustained in UK, 1st signs in Ireland
DUBLIN Aug 28 (Reuters) - Home improvement and building supplies group Grafton said recovery in Britain, its main market, is likely to be sustained, while the Irish market is showing the first tentative signs of recovery from a long slump.
Grafton has weathered the collapse in housebuilding in Ireland through an expansion in Britain, which now accounts for over 90 percent of its profits.
The third-largest building merchant in Britain said on Wednesday it was considering moving its listing from Dublin to London.
It posted a 17 percent rise in underlying operating profit to 36.6 million euros ($49 million) for the first six months of the year as revenues increased by almost 2 percent and sharp cost cuts that it made during the downturn took effect.
Chief Executive Gavin Slark said the general economic picture in Britain, together with the government's 'Help to Buy' scheme for first-time buyers, gave cause for optimism. Grafton's like-for-like sales in Britain have risen 5.5 percent since June.
"What the 'Help To Buy' has done, it's just given the housing market a little bit of a shot in the arm and just made things feel better," Slark, the former boss of British plumbing and heating firm BSS, said in a telephone interview.
"Across the whole of the UK, the sentiment is more positive that it has been for four or five years. There's just a little bit more in terms of green shoots. It's very early to call any sort of trend in the recovery, but there's some decent signs to give us cautious optimism for the second half."
In Ireland, where Grafton operates under the "Woodie's DIY" brand, first-half revenue grew by 1 percent, the first year-on-year growth in six years, strengthening further in July and August with gains of over 5 percent.
Sharp house price rises in Dublin are driving a recovery in the Irish property market and highlighting a lack of supply in the capital. That along with optimism along the east coast shows it is now time to start building houses again, Slark said.
"Maybe it's too early to call green shoots, but you can certainly call them green seeds," he said.
"We haven't built very many houses for a number of years, and I believe the sustainable market is something around 25,000 new houses a year. The housing recovery, from our perspective, is all about how we get from building 5,000 to 10,000 houses a year to that sustainable level, and that would be great for the economy."
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