First-half profits fall at Readymix

Readymix has posted a 19 per cent drop in profits for the first half of the year, with increased competition and higher costs blamed for the fall.

The building materials firm said yesterday that it had suffered an "erosion of margins" in the six months to the end of June.

This meant that even though turnover rose by 6 per cent to €122.6 million, operating profits declined from €12.8 million to €10.4 million.

Sales of ready-mixed concrete in the Republic, which account for around half of Readymix's business, were up 11 per cent at €77.2 million, but margins fell back.

Readymix managing director, Mr Joe Doyle, said the firm had come under pressure from a combination of new market entrants and an overall increase in capacity.

"We hope to see a slightly better second half," Mr Doyle said. The company is reorganising itself with a view to halting the decline in earnings, he added.

Readymix has declared an unchanged dividend of 1.65 cents per share.

The first six months were less harsh in the North, where Readymix offers a greater spread of products. Sales grew by 9 per cent, margins were maintained and profits increased. Readymix's smaller Isle of Man business was hit by a decline in infrastructural spend on the island.

The firm spent €8 million on acquisitions in Roscommon and Waterford over the first half, with strong cashflow suggesting that ample capacity remained to support further purchases.

Operational cashflow climbed from €12.9 million to €14.1 million, with borrowings more or less steady at €36.8 million.

Mr Doyle said Readymix could spend up to €40 million on acquisitions over the next few years if suitable opportunities were to arise in aggregates or pre-cast operations. The building materials market is particularly fragmented, leaving few large acquisition targets in the sector.