Readymix estimates first-half loss of €10m

BUILDING MATERIALS group Readymix estimated yesterday that it lost €10 million in the first six months of the year, prompting speculation that its biggest shareholder may buy it out.

The group cut over 100 jobs since the start of 2008 and has closed a number of operations in a move to counter the construction slump.

Yesterday it issued a trading statement for the first half of the year, warning that losses before tax for the period will be approximately €10 million, made up of €2.7 million in rationalisation costs and the balance from a fall-off in trade.

Most analysts reacted to the news by recommending the stock as a buy, pointing out that the group's cutbacks and some property sales will bring Readymix back into profit by the year's end.

NCB analyst John Sheehan argued in a note issued yesterday that the group's 63 per cent shareholder, Mexican giant Cemex, could take advantage of the low share price and mop up the existing 37 per cent. However, the company would not comment on this.

Readymix said yesterday that in response to deteriorating conditions, it has cut personnel by 15 per cent since the start of the year. There are about 600 people left on its payroll. While it would not put an actual figure on the number of job losses, it is understood to be just over 100.

The job cuts were a mixture of lay-offs and not replacing people who left or retired. They follow about 50 jobs that were lost when it shut the Finlay Breton business last year and closed a manufacturing facility in Naas, Co Kildare.

It has closed a number of other sites, including a block manufacturing plant on Killeen Road in Dublin.

In its statement, Readymix said that revenues are down 12 per cent on last year's first half, while the company expects to make an operating loss, before once-off charges, of €7 million for the six-month period.

It added that as a result of the cuts and the sale of assets, the company expects to end the year in profit. "Readymix expects very difficult trading conditions for the remainder of the year," the statement said.

"Infrastructure projects have not compensated for the decline in the housing sector, and margins will continue to come under pressure from higher fuel and energy costs."

Readymix chairman Adrian Aeur said the company is facing tough trading conditions across all its markets.

"However, Readymix plc is a resilient company with a strong cash position and a well-invested portfolio of debt-free operating assets."

Davy analyst Flor O'Donoghue said yesterday that Readymix had €37 million in cash at the end of 2007, which worked out at 34 cent a share. He estimated the com-pany's net asset value per share at €1.64 at the time.

"Our current forecast is for pretax profits in 2008 of €6 million," he said. "This might be too much of a stretch on the basis of the first-half losses, and we will be reviewing forecasts."