Grafton Group shares rise by 15% despite 79% fall in pre-tax profits

SHARES in building material group Grafton were up by 15% in late trading yesterday, despite a sharp reversal in its profit performance in 2009.

The market was impressed by the group’s optimism on the future outlook for the sector, whose main markets are Ireland and Britain.

Pre-tax profits for the year to December 31, 2009, fell 79% to €13.6m down from €64m.

The group suffered a sharp reversal in turnover which fell 26% to €1.98 billion from €2.67bn after what the group said was the most difficult trading environment it had encountered in decades.

The group is well known as the owners of Woodies DIY and Atlantic Homecare and for its extensive builders materials stores of which there are 582 spread across Britain and Ireland.

Up to 9,300 were employed by the group at the end of last year, representing a cut of over 1,000 jobs during the year and giving a combined jobs cull over 2,700 in the past 24 months.

Executive chairman Michael Chadwick said the group is now well established to benefit from any up-tick in the two economies.

As a result of the cost, restructuring the group has taken about €85m in costs out of the business.

When business picks up the group said it was confident its new streamlined model would be able to cope without adding to group operating costs.

Turnover in its merchanting business fell by 26% to €1.69 billion.

Operating profits, before rationalisation costs, fell to €39.3m from €121.9m in 2008.

The merchanting business traded against a backdrop of declining economies in both Ireland and Britain and lost money in Ireland while the retail DIY sector operated at a profit.

Its merchanting branches in Ireland recorded a turnover decline of 42% to €370m from €642m and reported an operating loss of €10.3m before a property profit of €6.1m.