Grafton says UK volume recovery stymied by property tax rumours
Building materials distributor and DIY retailer Grafton Group Plc held annual guidance but warned UK volumes were unlikely to recover this due to the threat of new property taxes.
The company also announced a new £25m share buyback after interim profits jumped 19% to £91.5m on the back of a strong contribution from non-UK operations.
Grafton said it remain cautious on the near-term outlook for UK demand as the cash-strapped government mulled new taxes to fill a public spending gap of at least £20bn. Among the options being considered are scrapping stamp duty for buyers and replacing it with a new property tax on sellers of homes worth more than £500,000 and ending the capital gains exemption on main residences above certain thresholds.
The company said operations in Spain and Ireland helped drive a 10% rise in revenue to £1.25bn.
"We expect to deliver full year adjusted operating profit broadly in line with analysts' expectations recognising the important autumn trading season has still to come," Grafton said on Thursday.
It added that non-UK markets now account for approximately 64% of group turnover and expected the diversification trend to continue.
"Whilst we saw an easing of trading momentum towards the end of May and into June, the start of the second half has seen a return to growth of group average daily like-for like revenue," Grafton said.
Reporting by Frank Prenesti for Sharecast.com
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