WHEN Gavin Slark was handed the toolbox and made chief executive of the Irish-based builders merchant two years ago, Grafton was in dire need of repairs.
The global financial crisis had all but flattened the UK and Ireland’s construction market and sent housing transactions into freefall, dragging Grafton off the cliff with it.
Profits collapsed from €229m in 2007 to just €14m in 2009. And while the company avoided having to go cap in hand to shareholders it was forced to make severe cost savings, shedding more than a quarter of its workforce.
So by the time Slark took over as chief executive in July 2011, his predecessor Michael Chadwick had turned the Irish business into a much “leaner” version of its pre-crisis form.
But Slark had a different plan in mind and instead started to focus on turning around the UK business – a jumble of different brands acquired over the years that were yet to be consolidated under the Grafton umbrella.
“Because the downturn in Ireland had been so dramatic, the group had done a huge amount of work right-sizing the business in Ireland. So by the time that I joined there were more opportunities in the UK business for self-help,” Slark tells City A.M.
The size of the task didn’t faze the 48-year-old, who joined Grafton fresh from overseeing the £557m sale of plumbing supplies group BSS to larger merchant rival Travis Perkins.
“Both my predecessor and the chief financial officer had been at Grafton for 20 years so there was an awful lot of management change that needed to happen. Particularly in the UK, where the team needed refreshing.”
Then came the self-help measures, which Slark says were a combination of things – from cutting debt to improving the operational efficiency and the structure of the business.
Two years on, the 48-year old is sitting comfortably at a restaurant in the heart of the City – his strategy of making the British market its main focus now well underway.
Slark cancelled Grafton’s primary listing in Dublin last week and moved to the London Stock Exchange – a decision he hopes will attract new investors looking to benefit from growing confidence in housing and construction.
“Because the business was recovering out of the recession and because we generate most of our business in the UK, we recognised that there was an opportunity for a broader investment in London and the timing felt right to make the move,” he said.
Grafton’s UK operations, which include brands such as Selco and Buildbase, now eclipse those of its home market and account for almost two thirds of its £2.2bn annual revenue.
The company is the UK’s third largest building supplies firm – a fact that Slark feels is often overlooked by London-based investors.
“We are probably one of the few £2.2bn turnover businesses that no one has really heard of,” Slark said.
But that is something he hopes to change. At the top of the agenda is expanding Selco’s store network, which Slark says has become the merchant of choice for the so-called white van man, the general British tradesman.
Selco currently has 34 stores in the UK, including 24 in London where Slark hopes to grow at a rate of three or four a year.
With more than £170m cash at his disposal the ambitious boss also has his sights on further acquisitions, although he is quick to point out that Grafton’s strategic for the next three years is one of “organic growth”.
“Our net debt was down to £175m at the half-year in June and the business financially is in a very robust state. That’s important even when you look at acquisitions, but having worked so hard to get there we are not going to do anything that puts that financial robustness at risk,” Slark says.
But with the company set to post £2.2bn sales this year and enter the FTSE 250 with a market value of around £1.4bn by Christmas, those risks seem far removed.
Like its peers, Grafton – whose business is driven by homeowners looking to improve or renovate their homes – is benefitting from the recovery taking hold across much of the country.
While the second part of the government’s Help to Buy scheme, which is focused on the secondary housing market, is expected to boost Grafton’s sales, Slark believes it will take a while for those benefits to come through.
“I think Help to Buy part two coming early is a very positive thing but it will probably be the middle of next year before we start seeing the real benefit coming into our business,” he said.
Slark calls it a “new dawn” for the firm, one where Ireland still plays an important part but where Grafton is a firm that everyone in the UK – from the tradesman to the City investor – will have heard of.
CV GAVIN SLARK
Sunderland in 1965
Went to school in Leamington Spa, Warwickshire, then became a sales trainee for East Midlands Electricity at the age of 17
1995: Regional director for Motorworld
1999: Joins ICI Paints as general manager of ICI’s Dulux Decorator Centres
2002: Slark rose through the ranks at BSS to become chief executive in 2006
2010: Sold BSS to Travis Perkins and joins Grafton as interim chief executive
2011: Becomes chief executive of Grafton
Cycling and drumming
Married with two daughters