Building materials firm Grafton sees 72% profit fall

Builders' merchant and DIY group Grafton has reported a 72.8 per cent fall in pre-tax profits to €64.1 million for 2008 as the company struggled with the economic downturn.

The company, which owns the Woodie's, Heiton Buckely, Chadwicks and Atlantic Homecare chains, said turnover in the Republic fell 20 per cent to €986 million while DIY sales here were 11 per cent lower.

Group revenues dropped 16 per cent to €2.67 billion. Earnings per share are down 71 per cent at 25 cent.

Leo Martin, chief operating officer of Dublin-listed Grafton, said it had reduced its employee numbers by 1,500 in 2008, leaving the company with a workforce of 9,300. A further 150 employees are due to depart before the end of March. He said all redundancies had achieved on a voluntary basis.

Mr Martin added that there was some evidence that Grafton was taking market share from competitors. "Our sales in the merchant trade would be down around 24 per cent but our suppliers say their business is down by a third so we are taking market share," he told The Irish Times.

Despite the job cuts the company had managed to keep its branches open, he said. Some 120, of the group's 590 outlets, are based in the Republic with an even split in terms of DIY and builders' merchants.

The group is targeting €45 million in cost savings this year, above the €30 million previously flagged.

Net income declined to €57.7 million, or 32.2 cents a share, from €205.2 million, or 84.78 cents, a year earlier.
The company said trading in January and February continued to decline and was made worse by the heavy snowfall.

Grafton's Irish operations suffered a 20 per cent decline in turnover to €985.6 million with operating profit falling to €33.5 million from €123.7 million in 2007.

It noted that house completions fell by a third to 52,000 units while housing completions dropped by two-thirds to 25,000.

Sterling's 23 per cent fall against the euro also hurt earnings. "The major influences on performance were contraction in the UK and Irish economies, a reduction in the availability of credit to households and the depreciation of sterling against the euro," Grafton said in the statement.

Davy analyst Flor O'Donoghue said the earnings per share and net debt - at €435.5 million, implying a €114.8 million reduction – were better than expected at the end of a very difficult year.