Grafton into the red

Published:  28 August, 2009

DUBLIN: Grafton reported a €8.3m operating loss for the first six months of 2009.

This compares to same period last year when it reported operating profit of €71.8m Revenue for the first six months of 2009 was down 31% to €990m, compared to the €1.44bn in 2008.

Michael Chadwick, executive chairman said: "Grafton's focus remains firmly on maximising operational efficiencies and cash generation. The intensity of the downturn in our markets has moderated and recent months have seen more stable sales levels."

"In the UK, housing starts are rising and leading indicators for repair, maintenance and improvement work are positive. The group is confident of trading successfully through this major cyclical downturn and is well positioned to capitalise on upturns in activity in its markets," he said.

Pre-tax profits were down to €3.7m compared to the €53.4m in 2008 due to a 26% decline in average daily like-for-like sales, the group said.

The group's merchanting division, which accounts for 85% of its turnover, saw operating profit before property profit and restructuring costs, fall to €3.4m from €74.9m. This compares to the relatively strong performance of the group's UK business in the first half of 2008 and reflects a further sharp deterioration in the Irish trading environment, Grafton said.

Turnover in Grafton's UK merchanting division was down 26% to €647m, with operating profit before rationalisation costs of €12.8m, compared to €49.9m reported in 2008.

Turnover in the group's Irish merchanting business was down 46% to €193m from €355m the previous year. The business reported an operating loss before rationalisation costs and property profit of €9.4m, compared to a profit of €25m last year. Lower investment in residential construction was the most significant contributor to the very difficult trading conditions in Ireland, the group said.

Grafton said recent developments in the UK economy have been "broadly favourable and encouraging". Graton expects Irish housing completions to decline further this year and into 2010.

Grafton's Irish retailing business will sustain a fall in volumes over the remainder of the year, the company said.

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