Qualceram shares plunge after profit warning

BATHROOM suites maker Qualceram Shires saw its shares plunge 21 cents or 15% to €1.19 yesterday after it issued a strong profit warning.

The group said sales for the year to December 31, 2005, would be well below last year and made it clear the result would fail to meet the market’s expectations.

Stockbrokers NCB said it expected sales to be down 5% year on year. In a note on the group it said it expected turnover to be down and as a result “forecasts will miss market estimates as corrective action will be insufficient to offset this decline”.

It noted the company was seeking additional savings in its operations and stressed that it remains cash generative.

“We expect the tougher British market to lead merchants and retailers to squeeze suppliers even more than in the past and remain cautious on the stock,” NCB said.

A weaker British merchanting market and retail sector is the primary cause of weakness in Britain. In Ireland, demand has remained satisfactory but some product from Britain has led to tighter pricing conditions, said NCB.

Qualceram said the group was still generating cash, but it expected the tougher British market to lead to slower sales and profits this year.

It points to weaker economic growth in Britain resulting in a weakness in the new housing market for the time being.

Good news for the group is the satisfactory state of the Irish market which unfortunately has not stayed immune from the overall situation in Britain.

NCB said that price pressure in Britain will add to problems for suppliers in the Irish market also.

“As a result of the factors outlined in our markets, total group turnover is likely to be some 5% down on last year.

“This will impact on margins with the result that the outcome for the full year is likely to fall short of current market expectations,” the company said.