Pre-tax profits at Irish builders merchant group Grafton fell 72% in the twelve months to December 31 2008, but UK turnover held up, sliding just 1% to £1.34bn.
Overall turnover dropped by 16.6% from €2.67bn in 2007 to €3.21bn in 2008 when 63% of turnover was generated in the UK and 37% in Ireland.
However, in the UK the company saw turnover of £1.34bn, down just 1% from 2007's £1.35bn. Currency exchange fluctuations, however, meant that the drop in euro terms was more like 15%: with UK turnover falling from €1,977,651 to €1,687,333. The merchanting business faced "a challenging year", with UK merchanting revenue falling nearly 14% from €1,905, 378 to €1,642,005.
Grafton said they saw demand 'slow substantially' from mid-year UK operating profit which declined by 52% to €68.0m (2007: €142.1m) and by 44% in sterling terms
Operating profit, before adjustments, fell by 55% to €118.6m from 2007's €265.8m
Pre-tax profits for the group were €64.1m, down 72% from 2007's €235.8m.
Executive chairman, Michael Chadwick warned there was more bad news to come.
"Trading in January and February continued to decline, made worse by the heavy snowfall. Our businesses have strong market positions and brands in the UK and Ireland and we expect to emerge from the current market downturn as more efficient enterprises well placed to take advantage of growth opportunities."
Grafton is the fourth largest merchants business in the UK operating the Buildbase, Plumbase, Jackson Building Supplies and Selco brands.
Buildbase saw a positive start to trading but much tougher conditions as the impact of the recession and credit tightening took hold. The business reduced workloads and consolidated a number of underperforming branches, cutting capital expenditure and limiting expansion to nine branch openings and two single branch acquisitions. Demand from the core RMI customer base declined in the second half, although gross margins were maintained despite more intense competition.
Jacksons' turnover fell, but the division remained profitable and opened new branches were opened in Alford, Lincolnshire and York, Yorkshire.
Selco, the trade only self-select warehouse-based format, had a very successful year in 2008, being positioned in the most resilient segment of the RMI market. The three branches in London that opened in 2007 traded in line with expectations. A further five stores opened during 2008 increasing the network to 25 including 11 in London.