Selco-owner Grafton warns over ongoing supply woes and price hikes

The owner of builders materials supplier Selco has posted a surge in half-year profits, but warned over ongoing supply chain disruption and soaring prices.

Grafton – which also owns the Woodie’s DIY chain in Ireland – said it saw “significant pressure” on the supply chain in the six months to June 30, with shortages of core materials, such as cement, steel, timber and plastics.

While it managed to lessen the impact on its stock levels by working closely with supply chain partners, the group said the materials shortage pushed up prices by around 7.5% compared with the same period a year ago.

The group cautioned that supply issues and price pressures were set to continue throughout the rest of 2021.

It said this posed a risk, although it remains confident of being able to mitigate the issues.

“The group experienced supply chain disruption and significant building materials price inflation in the first half which is expected to continue in the second half with the risk that the group is unable to fulfil customer demand because of volume shortages or because customer demand reduces due to increased prices,” it said.

It marks the latest sign of a mounting supply chain crisis in the UK, which is hitting a raft of sectors – from food and hospitality to housebuilding.

A lorry driver shortage in the UK is adding to post-Brexit disruption and worldwide material supply problems amid the pandemic.

For builders, DIY businesses and construction firms, the supply crunch is heightened as it comes at a time of soaring demand.

Despite the supply chain woes, Grafton revealed sharply higher statutory half-year pre-tax profits for continuing operations, which jumped to £142.9 million from £29.5 million a year earlier on revenues up 46.1% at £1.03 billion.

Grafton recently agreed to sell its UK-based merchanting arm – including the Buildbase chain – to builder merchant Huws Gray for £520 million.