Grafton Group buys Spanish distribution business for €132m

The company, which owns the Chadwicks and Woodie's brands in the Irish market, in a trading update on Wednesday, also reported revenue in the year to October 20th of £1.82bn. That is down 3.7pc from the same period last year and 2.3pc lower in constant currency.

Average daily like-for-like revenue was 1.6pc lower, in constant currency, in the four months to October 20th. The company said the rate of decline has moderated in comparison with the first half of the year, when average daily like-for-like revenue was down 4.5pc.

In Spain, the group will acquired the entire issued share capital of Salvador Escoda, SA, a fifty year old distributors of air conditioning, ventilation, heating, water and renewable products serving professional installers across the residential, commercial and industrial sectors.

The total consideration payable is a maximum of €132m on a cash and debt free basis, including €128m payable at completion and a further €4m subject to financial performance conditions.

Salvador Escoda reported revenue of €231.8m and adjusted operating profit of €16.5m for last year.

Spain is the fourth largest construction market in the EU and forecast to be among the fastest growing economies in Western Europe over the period 2023 - 20262.

Salvador Escoda is headquartered in Barcelona and operates from 93 branches throughout Spain supported by four distribution centres, including a new 18,000 square metre facility in Seville.

Grafton Group CEO Eric Born, said the acquisition is consistent with a strategy of acquiring platform businesses in new markets with the opportunity to drive further growth and scale.

"The fragmented nature of distribution markets in Spain, in addition to the expected long term structural growth in the Spanish economy, provides a unique value creation opportunity for Grafton," he said.

Meanwhile, the overall group results mask differences between key markets with Ireland showing continued growth but challenges in some economies.

"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 least in the demand for new housing as markets normalise and consumer confidence improves. In spite of a slower seasonal pick up in the important Autumn trading months and foreign exchange headwinds from our euro denominated businesses, we anticipate delivering adjusted operating profit for 2024 broadly in line with analysts' expectations," he said.