Readymix revenues slump in 'challenging ' conditions

Building materials group Readymix saw its revenues slump in the first six months of 2009, with the company predicting further challenging conditions ahead.

The firm recorded a pre-tax loss of €6.9 million for the sx-month period, with operating losses before non recurring items at €7.1 million.

The company blamed "challenging trading conditions" and falling demand for its products caused by "exceptional weakness of the housing and commercial construction sectors" for the decline, with total revenues from continuing operations down 45 per cent compared to the same period a year earlier.

In a regulatory statement, Readymix said market conditions had led to a decline in total aggregates revenues of 30 per cent, while concrete, blocks and other revenues have fallen 52 per cent as a the number of housing starts has fallen.

Goodbody analyst Matthew Cotter said the €6.9 million loss was in line with the stockbroker's forecast of €6.8 million, and despite the extremely difficult earnings outlook, the company still had a strong balance sheet.

Readymix cut its workforce by 10 per cent since the end of last year, but cost saving inititatives have not been able to offset the significant reduction in revenues.

Disposal of non-core business assets will also be considered, but the group said the given the current economic weakness, sales would only be agreed "where it is felt that realisations add value to shareholders".

Readymix said it had also agreed a cash facility of up to €15 million from CFC, a subsidiary of its parent group Cemex.

The company is expecting the tough conditions seen since the end of 2007 to continue into the near future.

"Readymix plc expects very demanding trading conditions for the remainder of 2009 and continuing into 2010, as a result of the weakness in the housing and commercial sectors and the delayed start of new infrastructure projects," the statement said.

"Against this background, the priorities for management are continued cost reductions and focusing on projects to deliver efficiency savings."

The reduced availability of financing, increase debtor default risk and the loss of key customers were some of the risks facing the firm in the rest of 2009.