Heiton builds on 30% profit rise

TAKEOVER target Heiton was bullish about its future as an independent entity yesterday as the builders’ providers and DIY group reported full-year profits of €28.8 million, an increase of 30%.

The company saw sales from its Irish operations, which include Atlantic Homecare, Heiton Buckley and Cork Builders Providers, go up by 9% to €434m in the year to April.

But weaker sterling and a restructuring of its businesses in Britain caused British sales to slump €10.7m to €68.5m.

Chief executive Leo Martin said Heiton’s performance was excellent and reflected internal reorganisation during the year that saw the group divide itself into separate divisions aimed at trade and retail customers.

The trade division accounted for two-thirds of group sales.

Mr Martin said the restructuring of the British division paid off by delivering a profit of €1.6m after a loss of €0.2m the previous year.

The group also benefited from record levels of construction in Ireland that saw over 70,000 new houses built last year.

Mr Martin said Heiton’s strong position, coupled with positive signals on the economy, left it well placed to deliver growth in the future.

He said sales in May were 14% ahead of the same month last year, fuelled by a very strong performance from the retail division and favourable weather conditions.

Net debt fell from €70.2m to €42.6m as the group used its ability to generate cash to pay down bank loans.

The group’s interest bill fell during the year from €5m to €3.8m. Heiton also negotiated a new lending package with its banks that would give it up to €80m to fund new acquisitions.

Mr Martin said the group had already completed two major purchases so far in 2004, adding new businesses in Waterford and Drogheda, and that the company had identified a pipeline of further opportunities.

Three new Atlantic Homecare stores will open later this year, with new stores in Wexford and Tullamore and the transfer of a store from Cork’s Mallow Road to Blackpool retail park.

Mr Martin also predicted significant opportunities for the group from existing homeowners who choose to develop their properties as an alternative to so-called “trading up”.

Mr Martin cited recent research from estate agents that showed a shortage in supply of second-hand homes, as well as high costs associated with moving house, such as stamp duty and legal costs, and said more homeowners were beginning to see greater value in improving their existing homes.

The company said it would pay a final dividend of 10.7 cents per share.

This brought the total dividend to 17.7 cents, which was 23% higher than the previous year.