Grafton profits fall 73% to €64m

THE deteriorating property markets and economic conditions in Ireland and Britain have severely affected financial performance at the Dublin-headquartered building materials/DIY group Grafton.

The group, which owns the Woodie’s and Atlantic Homecare DIY retail chains here, yesterday reported a 72.8% fall in full-year pre-tax profits for 2008, to €64.1 million.

In real terms, this figure was down from a profit of €235.8m at the end of 2007. Elsewhere, operating profit fell by 63.4% to €99.2m and group revenue was down by over 16% at €2.67 billion. Basic earnings per share were also hit hard, falling by nearly 71% to 25.09c.

While the revenue figure was in line with recent analyst forecasts, the pre-tax profits were well below expectations.

Approximately 63% of turnover, last year was generated in Britain, with the remainder coming from Grafton’s Irish operations, where sales are likely to fall further in the current year.

Like-for-like sales in its DIY division, fell by 11% last year.

Group chief executive, Michael Chadwick said that management would be focusing on cost control and operational efficiency measures, but added that the group was well-placed to take advantage of growth opportunities.

Further job cuts — on top of the 1,500 redundancies seen last year — have not been ruled out, however.

“While conditions in the financial and credit markets make the timing and nature of any recovery uncertain, both economies have been resilient to past economic shocks,” Mr Chadwick said.

Trading in the first two months of this year, however, showed continued decline — made worse by the heavy snowfall here and in Britain.

Grafton spent €28.1m on acquisitions last year — down from €89.2m in 2007 — but said, yesterday, that cash flow this year would be focused only on “essential asset replacement projects.”