DIY and builders' supplier group Grafton is shutting UK businesses while suspending a dividend payment to save €32 million as it faces an "inevitable" hit to profits.
Grafton, best-known in this country as owner of the Woodie’s DIY chain, has large builders’ supplies businesses in the UK, which are locked down for three weeks to combat Covid-19.
The group is closing all its distribution and manufacturing businesses in the UK for the next three weeks, subject to government clarification on the supply of essential repair and maintenance materials from some branches.
Grafton's businesses in the UK include construction suppliers Buildbase, Civils and Lintels, and Selco.
“The Covid-19 virus will inevitably lead to a material decline in revenue and profitability over the coming months,” Grafton said in a statement.
The company added that the uncertainty brought by the pandemic meant it was no longer possible to guide investors on its likely financial performance this year.
Grafton is suspending the payment of a second interim dividend for 2019 to save £30 million (€32.65m) in cash.
Shareholders were due to receive this on April 6th. Grafton pledged to resume dividend payments to investors as soon as possible. It expects the UK business and its cashflow to benefit from a job retention scheme and other measures announced by the British government. Grafton is not laying off workers as a result of these closures.
The company noted that trading so far this year had been in line with its expectations with limited impact from Covid-19.
"There was some evidence over the last week of stronger demand in a number of our distribution businesses and in the Woodie's DIY, Home and Garden businesses in Ireland due to forward buying," it added.
Chief executive Gavin Slarke stressed that workers' and customers' health were Grafton's priorities.
“Grafton is in a strong financial position with excellent liquidity and I am confident that the group will emerge from this period of uncertainty in a position of strength,” he said.
The group said that it had £303 million as well as £275 million in undrawn credit, already committed by its banks.
Grafton’s shares were up more than 12 per cent at 442.6 pence on the London market, where the company’s stock is traded.
