Grafton Group - Response to COVID-19 as expected

Davy Research
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Events are evolving at a rapid pace but Grafton’s COVID-19 update was essentially as what would have been expected. It was no surprise that full year financial guidance was withdrawn and that a material decline in profitability is anticipated. We concur with the group’s assertion that it is well placed financially to come through the current uncertainty. In addition, the decision to withdraw the payment of the H2 2019 dividend is unsurprising and understandable. The very near-term outlook is clearly hugely challenging and without precedent; however, we are confident that over time the strength of the Grafton business model and, in particular, its cash flow generation capabilities will shine through.