Key points
-
Are you interested in Grafton Group plc? Here are five stocks we like best.
-
Grafton Group sets financial targets for 2030 including over £850m of cumulative free cash flow, adjusted earnings per share growth of over 10% annually and a return on capital employed of approximately 13%. Management said the plan is supported by stronger growth in Ireland and Iberia, plus gradual improvement elsewhere.
-
Capital allocation and acquisitions remain critical to the strategy, with the company prioritizing organic growth, dividends, sensible acquisitions and possible buybacks or special dividends. Grafton also aims to maintain an investment grade balance sheet and maintain lease-adjusted net debt to EBITDA of one to two times.
-
Ireland and Iberia are the main growth engineswhile Britain, Northern Europe and Finland are still in recovery mode. The company highlighted Ireland as its “powerhouse” and said Iberia could reach £1 billion in revenue by 2030 through organic expansion and acquisitions.
Grafton Group (LON:GFTU) outlined a five-year growth plan at its Capital Markets Event, with management highlighting the company’s European distribution platform, cash generation and acquisition strategy as key drivers of shareholder value through 2030.
CEO Eric Born said Grafton is “uniquely positioned to drive significant value over the next five years,” citing its scale, leadership positions in multiple European markets and what the company calls its “federated operating model.” The group operates with around 10,000 colleagues at more than 600 locations and supplies construction-related products from more than 15,000 suppliers to a largely small and medium-sized customer base.
→ Cybersecurity Earnings: 1 Featured Stock in AI and 2 Stocks Under Pressure
Born said Grafton generated more than £2.5bn of revenue in 2025, with an adjusted EBITDA margin of 12.7% and operating profit of £184m, representing an operating margin of 7.3%. Over the last decade, it said, the company delivered an average return on capital employed of 13.7%, cumulative free cash flow of £1.8bn and a total shareholder return of 77.8%, above its FTSE 250 peer group.
2030 targets focus on cash flow, EPS and profitability
Grafton set out financial ambitions for the period 2026 to 2030, including cumulative free cash flow of more than £850 million, compound annual adjusted earnings per share growth of more than 10% and a return on capital employed of around 13% by 2030.
→ Uranium Energy Corp melts: nuclear opportunity within reach
Born said the targets assume continued growth in Ireland and Iberia, along with gradual improvement in Britain and northern Europe. He added that the company does not assume that those latter markets will return to “normalized” margin levels by 2030.
Chief Financial Officer David Arnold said capital allocation remains critical to the company’s model. He said Grafton prioritizes organic development of existing businesses, ordinary dividends with a stated coverage target of two or three times earnings, acquisitions at reasonable multiples and, where there is surplus capital, share buybacks or special dividends.
→ The case of Intel versus exclusive quantum companies
Arnold said Grafton has returned just over £950m to shareholders over the past 10 years, including more than £500m in dividends and £430m in share buybacks through the end of 2025. He said the company intends to maintain an investment grade credit rating and target lease-adjusted net debt to EBITDA of one to two times.
Ireland described as the “powerhouse” of the group
Patrick Atkinson, chief executive of Grafton’s trade-focused business on the island of Ireland, said the division generated just over £1.25 billion in sales in 2025, supported by 122 branches and more than 3,500 colleagues across commercial and consumer operations.
Atkinson said Ireland’s economic backdrop remains favourable, highlighting population growth, government infrastructure commitments and housing demand. He said government policy includes a commitment of more than €100 billion on housing and infrastructure, supporting a target of 300,000 homes by 2030.
For Grafton’s Irish commercial businesses, Atkinson said management expects a sustainable operating margin of 9% to 10%. He highlighted digital initiatives including Trade Hub, Trade Hub Pro, AI-backed product insights and a “branch of the future” program aimed at reducing wait time and paperwork for business customers.
Woodie chief executive Damian Dwyer said the company’s Irish DIY, home and garden retail business delivered an operating margin of 13.5% in 2025 and has generated a 6% CAGR on sales over the past decade. He said Woodie’s has 97% brand awareness in Ireland, 36 stores with a new opening in Ennis and a pipeline of future locations, although he noted that suitable sites for retail parks are a limitation.
Pippa Casey, digital and marketing director at Woodie, said digital sales have increased by 44% in the last 24 months. He said the company plans to expand its online reach by 50% over the next 18 to 24 months and launch a Woodie’s app within the next 12 months.
Britain focuses on recovery and self-help
Frank Elkins, chief executive of Great Britain, said Grafton’s businesses in Great Britain generated £765m of revenue and an EBITDA margin of 6.5%. The portfolio includes Selco, CPI Euromix, Leyland SDM, TG Lynes and StairBox.
Elkins said the UK market remains difficult, with pressure from weaker repair, maintenance and improvement activity and lower housebuilding. However, he said Grafton remains optimistic about medium-term prospects due to tight housing supply, aging housing stock and population growth.
For Selco, Grafton’s largest business in Britain, Elkins said customer research identified speed, certainty, value, convenience and insight as key priorities. Initiatives include a loyalty scheme, a dedicated merchant app, improved same-day delivery capability, a delivery management system and investment in Selco’s own distribution centre. He also said that own-brand products currently account for less than 1% of Selco’s turnover, which presents an opportunity for growth.
Northern Europe and Iberia offer expansion potential
In northern Europe, Bert Bunschoten, chief executive of Isero and Polvo, said Grafton has generated sales of approximately £550 million across 265 branches and partner stores, supported by more than 2,000 employees. He said profitability has been affected by weaker construction activity and inflation, but management sees a path back to operating margins of 8% to 10% through services-led growth, digital ordering, logistics optimization and market recovery.
IKH CEO Anu Ora said the Finnish business has been hit by weak consumer confidence, higher interest rates and a sharp decline in the property market following the Russian invasion of Ukraine. He said IKH’s operating margin is now around 5%, compared to historical double-digit levels, but management sees recovery potential through digital investments, a greater focus on B2B customers and expansion in Sweden.
At Iberia, CEO Mario Ballarín said Grafton’s ambition is to reach £1bn of revenue in the region by 2030, supported by organic growth and acquisitions. Grafton entered Iberia through Salvador Escoda and recently added Mercaluz, both operating in HVAC distribution but with different business models. Ballarín said the Spanish HVAC market is benefiting from economic growth, housing demand and rising temperatures, which are increasing demand for air conditioning and related products.
Chairman Ian Tyler said it can be difficult to make money in the Grafton industry, but he said companies that are well managed, carefully invested and disciplined with capital can create value over the cycle. Born concluded that Grafton’s diversified portfolio, operating model and cash generation support management’s confidence in creating shareholder value through 2030.
About Grafton Group (LON:GFTU)
Grafton Group plc is engaged in distribution, retail and manufacturing businesses in Ireland, the Netherlands, Finland and the United Kingdom. Its Distribution segment distributes construction materials, paints, tools, hardware, fixings and accessories, work clothing and PPE, and spare parts; materials and installations for mechanical services, heating, plumbing and air circulation; and the trade, DIY and self-build markets with building materials, timber, doors and flooring, plumbing and heating, bathrooms and landscaping products under the brands Selco, Leyland SDM, Chadwicks, MacBlair, Isero, Polvo, Gunters en Meuser, TG Lynes and IKH.
This instant news alert was generated by narrative science technology and financial data from MarketBeat to provide readers with the fastest reporting and unbiased coverage. Send any questions or comments about this story to contact@marketbeat.com.
The article “Grafton Group sets 2030 growth goals as cash flow, acquisitions take center stage” was originally published by MarketBeat.
See MarketBeat’s top stocks for June 2026.
