Qualceram turnover drops 30%

BATHROOM fixtures maker Qualceram Shires has warned that the slowdown in new house building has hit its sales.

The company, which in March received a takeover offer, said turnover in the first three months of the year was down 30% on the 2007 figure.

The decline, the company said, was principally the result of slowing house building in Ireland and Britain, but also from the impact of a strong euro.

The Arklow, Co Wicklow company said in a trading update yesterday that the weaker economic climate, “driven by an uncertain European interest rate environment, and difficulties in the financial markets,” has materially impacted on sales of the groups’ bathroom products.

It added: “A reduction in the number of operational days as a result of the Easter holidays also had an impact on trading.”

The poor first-quarter trading performance has not improved and Qualceram said group turnover for the half year to June 30 will “decline by approximately 30 percentage points, compared to the first half of 2007”.

The company gave no indication yesterday of the effect of the slump in turnover on its profitability.

However, analysts at NCB Stockbroker warns that the company is likely to make a pre-exceptional operating loss in the current year.

“This comes despite extensive outsourcing of product and continued rationalisation of the cost base,” NCB said in a research note.

Qualceram said it has begun a cost reduction programme, and the benefits of this will flow through later this year.

It added that to counteract the contraction in the market it has begun to develop new products aimed at the DIY sector.

“Furthermore, the group continues to take advantage of demand for its products in niche export markets, and the board expects this business to grow significantly as a contributor to group profits in 2008 and future years,” the company said.

In March, the company received a takeover approach from an unnamed bidder. It said that since then it has undertaken a process to evaluate that initial approach.

“This process is ongoing,” it said, without giving any further details.

Shares in Qualceram ended the day unchanged at €1.