Grafton revenue falls but outlook positive

GRAFTON group, the largest builders merchants in Ireland, is on course for improved results next year despite a 28% revenue drop to €1.69 billion in the year to the end of October.

The company reiterated that it continues to experience very challenging trading conditions but said the stabilisation of group turnover since April was maintained in September and October.

The group is market leader in DIY retailing in Ireland, with 22 Woodies stores and 16 Atlantic Homecare stores.

In Ireland, like-for-like sales fell 30% in October while the fall in the first half of the year was 37%. Group turnover in October was €174 million.

In the period to the end of October, DIY turnover was down 19% compared to 18% at the half year and manufacturing was down 45% against 49% at half year. Shares traded down 0.88% yesterday at €3.35.

Davy analyst Flor O’Donoghue said the figures released by Grafton were “slightly better than what we are expecting for 2009 overall”.

He said that overall, the figures are reassuring with evidence that revenues are stabilising. “With a more stable revenue line, and an improved cost base, the platform is now set for an improved operating result from Grafton,” he said.

In Britain, Grafton said volumes have risen in dry mortar sales which are mainly exposed to the new housing sector. It said the extensive rationalisation programme is well advanced and the benefit of cost reductions is being reflected across the group.

“The group is cash generative and net debt levels continue to be reduced.

“Grafton maintains a comprehensive business franchise in its core markets with strong competitive operating units and a conservatively managed, securely funded balance sheet with good liquidity,” the statement read.

Grafton said it is well positioned to capitalise on upturns in activity.