UK summer trading key for builders’ merchant Grafton Group

News

Half-year results from builders’ merchant Grafton Group PLC (LON:GFTU) will headline a quiet day in the Square Mile on Friday.


A trading update last month means investors already know some of the key figures: revenue increased by 2.4% to GBP1.48bn, while like-for-like sales rose 3.9%.


Bosses warned in that update that they had seen a slowdown in its UK business at the beginning of summer.


That can partly be explained by tough comparatives last year following the Beast from the East.


Still, Grafton also highlighted a degree of softening as people hold off from making any repairs or improvements amid the current economic uncertainty.


The Selco owner kept its forecasts in place back then, but said a lot depends on trading in the UK over summer if it is to hit targets.


With that in mind, investors will want to see strong trading in the opening couple of months of the second half, which would set Grafton up nicely heading into its “significant trading months” of September through to November.


If there has been a further drop-off in UK performance, watch out for a possible cut to forecasts.


UK consumer confidence data


On the data front, there is a UK consumer confidence reading due for release.


In July, the UK GfK UK Consumer Confidence score came in at minus 11, a small improvement on June, but still a relatively weak reading.


While it will be closely eyed to see how the Great British public are feeling, the reading is unlikely to move the FTSE 100, like similar data would in the US.


That’s largely because Britain’s blue-chips aren’t that exposed to the UK economy, although those on the more domestically-focused FTSE 250 might be a bit more sensitive to the number.


Nationwide house price index


Nationwide’s latest house price data will also be published on Friday.


Last month’s reading showed that house prices rose by 0.3% in the year to July, equating to an average rise of around GBP650.


House price growth has weakened significantly since the Brexit vote – when prices were rising by around 5% a year – as buyers hold off on big purchases amid the uncertainty.


Prices are still rising, albeit slowly, with demand underpinned by high levels of employment, cheap mortgages and first-time buyers taking advantage of the Help to Buy scheme.


Friday August 30:


Interims: Grafton Group PLC (LON:GFTU), BBGI PLC (LON:BBGI), Cathay International Ltd (LON:CTI), EMIS PLC (LON:EMIS)


Economic data: UK GFK consumer confidence, Nationwide house price index, UK mortgage approvals, UK consumer credit, US personal consumption expenditure index, University of Michigan consumer confidence

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