Sales at Irish builders merchant group Grafton dropped 14.5% to€2.35 billion in the 10 months to October 2008.
The fact that the UK businesses – which include Buildbase, Plumbase, Jackson Building Centres and Selco Trade Centres ¬- have significant exposure to the RMI sector rather than new housebuilding helped to keep turnover up in the UK, where it increased by 1.5% in Sterling terms.
However, the group have noticed an increasing downturn in the RMI market
activity, meaning there was a decline of 6% in like for like sales in the 10 months. Declining house prices, restrictions on the availability of mortgages and reduced growth in real disposable incomes put customers under pressure to cut back on housing related expenditure and investment.
In Ireland, turnover was down by 18% during the period. Like for like sales declined by 19% as the economy continued to slowdown and contract.
The company statement said: “The scale of the downturn in the housing market which is now under way for almost two years, has been made worse due to the significantly increased cost of borrowing and a severe tightening of credit. The impact of the decline in housing starts and completions on the Irish Merchanting business has been partly offset by market share gains and reasonable levels of activity in the RMI and non residential new build markets.”
The group’s management will now continue to focus on a programme of cost-cutting which they expect to bring in €30m of savings a year and maximising cash flow generation.
“The Group has a strong balance sheet backed by tangible assets with a substantial property portfolio. The actions outlined above should leave the Group’s strong brands well placed to cope with evolving market conditions and return to profitable growth when the UK and Irish economies begin to emerge from the current downturn. ”