Grafton Group plc, the builders merchants and DIY Group with operations across the UK and Ireland, today  issued a trading statement in advance of the company's Annual General Meeting to be held at 10.30 am today in the IMI Conference Centre, Sandyford Road, Dublin 16.  Grafton said sales were down €22m (-3%) to €617m, signaling the group returned to growth in Feb-Mar, for the first time since H2 2007.

Grafton said January trading was badly affected by the adverse weather conditions and sales in the month were €25m below the previous January.  Following this difficult start, trading in the UK, which now accounts for over 70 per cent of turnover, picked up with like for like turnover growth in each of the following months. In Ireland, sales continue to be below levels achieved in 2009 but the rate of decline has reduced.

Group turnover for the four months to the end of April was €617m, down €22m on the first four months of 2009.  UK merchanting sales in sterling increased by 4 per cent  in the three months to the end of April. Grafton said it has seen a strong resurgence in new house building in the UK and is optimistic that the positive effects of this on its businesses will continue.

During the first three months, Grafton incurred further rationalization costs of €1.7m (three months to March 2009: €4.1m) and this will result in annualised savings of €4.2m.

It says it continues to retain good liquidity and financial flexibility with a strong balance sheet and high cash deposits.  Negotiations continue with regard to refinancing some of the group's debt and it is anticipated that new arrangements will come into effect in the third quarter of this year. 

Grafton also announced  that Roderick Ryan will be appointed as Senior Independent Director to succeed Anthony Collins who is retiring from the board at the AGM later today.  Ryan joined the board as a non executive Director in 2006.

Goodbody analyst, Robert Eason, commented: "This statement confirms that Grafton is past the inflection point for yoy lfl trends, in both Ireland and the UK, which coupled with a significant reduction in the cost base underpins an improvement in operating profits in FY10. We, therefore, remain comfortable with our forecast for operating profits to double to over €40m in FY10. As we are now clearly on the upward trajectory for sales trends, we feel reported NAV is a more realistic basis for setting a price target, as the risks of impairment are now greatly reduced. We are therefore retaining our Buy recommendation with a PT of 400c (forecast NAV of 388c for FY10 and 404c for FY11)."