Grafton pretax profits down 79%

Builders merchants and DIY group Grafton has today announced full-year pretax profits which were down 79 per cent in 2009. Revenue declined by 26 per cent.

The group, which owns the Atlantic Homecare and Woodies DIY chains, recorded pre-tax profits of €13.6 million for the twelve months ending December 31st 2009 compared to €64.1 million a year earlier.

Revenue declined to €1.98 billion from €2.67 billion over the same period due to a sharp fall in market demand.

Net debt reduced by €227.9 million to €322 million during 2009 while group cost base reduced by an annualised €85 million.

Grafton said the rate of sales decline in Ireland was moderating but that trading conditions are expected to remain muted.

Retailing turnover in Ireland was down 18 per cent to €248 million last year and the group recorded an operating loss of €0.7 million for fiscal 2009.

Merchanting turnover declined 42 per cent to €370 million with an operating loss of €15.6 million.

The company said the sharp fall in DIY volumes in Ireland was mitigated by improved operational efficiencies. It added that during 2009, Woodies position as the leading DIY retailer was consolidated.

In the UK, which contributed 68 per cent of total revenues last year, turnover was down 20 per cent to €1.32 billion while operating profit declined to €41.7 million.

The group said turnover stabilised during the second half of 2009 with modest like-for-lie growth returning to a number of divisions. Grafton added further opportunities for expansion in the UK are currently under consideration.

“Group sales in the second half of 2009 were similar to the first half. This stabilisation of sales, combined with the action taken to substantially reduce the cost base and integration benefits in our merchanting business, resulted in improved profitability during the second half of last year," said Grafton's executive chairman Michael Chadwick.

"Sales in the first two weeks of January 2010 were affected by snow. Since then sales have been close to expectations and last year with good increases in sales into the UK new housing sector.

Mr Chadwick said the group was "well placed to benefit from its operating leverage as its markets recover.”