Grafton sees revenues fall in first half

Building materials group Grafton said revenues fell by €200 million to €1.4 billion in the first half of the year due to the severe construction slowdown but the company said it remained confident about its long term future.

Grafton which has operations in Ireland and the UK said sales in its Irish unit were down 16 per cent for the first six months of the year to €520 million.

The company noted that the fall in housing starts has "been faster and deeper than expected" as rising interest rates and falling consumer confidence deters home buyers in Ireland and the UK. That fall-off in turn has cut   demand for Grafton's building and plumbing products.

While the fall in new house building has led to a fall in like for like sales, Grafton said less than ten per cent of group turnover was exposed to this market.

Grafton said it has accelerated its integration of larger business as part of its efforts to reduce costs and said this process has cost around €2 million.

"The benefits of these initial measures are already evident in the current operating cost base", Grafton said in its statement.

In the UK Grafton said turnover increased 6 per cent in sterling terms to £700 million, although like-for-like sales were 2 per cent lower.

The company noted that sterling weakness against the euro meant that increased sterling revenues translate into a decline in Grafton's euro stated accounts.

Grafton said its balance sheet remains strong and holds cash deposits of €100 million and a similar sum of committed and undrawn bank loans.

Any group debt repayable up until 2010 is covered by cash resources or secured loans, the statement added.

Grafton shares closed at €3.05 in Dublin last night. The shares have fallen by over 42 per cent so far this year to give the company a listed market cap of €701 million.