Readymix pre-tax profits down by 21% in face of stiff competition

PRE-TAX profits at Readymix Plc fell by 21%, despite a 6% increase in turnover in the first six months of the year, as a result of reduced margins in the face of tough competition in the Irish market.

Pre-tax profits fell to €9.52 million from €12.06m in the first six months of 2003, while turnover rose to €122.6m compared to the first half of 2003. Readymix said an increase of 11% in sales in the Republic did not compensate for a combination of very competitive pricing and increasing costs, both of which led to an erosion of margins.

Sales in Northern Ireland increased by 9% but margins were maintained, and profits increased.

The company said that on the Isle of Man, a reduction in infrastructural spending led to a challenging six months for the company's concrete business. Trading profits for the group, at €10.4m, were 19% less than the €12.8m achieved in the first half of the previous year. Earnings per share declined from 9.01 cent to 6.82 cent.

Readymix said the reorganisation that started last year has been completed and action is being taken with a focus on reversing the recent decline in earnings. Some €6.2m was invested in capital expenditure in the first six months of the year and it invested €8 million on two acquisitions to strengthen the geographical spread of aggregate operations and precast products.

Cash flow from operations increased to €14.1m from €12.9m, and borrowings at June 30 was €36.8m.The company said this indicates the financial strength of its balance sheet for further expansion.

The directors declared an unchanged interim dividend of 1.65 cent per share, payable on October 1, 2004 to shareholders on the register at close of business on September 10 2004.