Irish builders merchant group Grafton saw turnover drop by 24% for its merchanting business in the six months to June 30.
Turnover for the half year for the group as a whole fell by €4450m to €990m, compared with the €1.4 billion achieved this time last year. Although its UK operations did make a profit, the Irish operations remained loss-making.
The company’s trading update blames the ongoing lack of available credit and depressed markets, which have resulted in sharp falls in investment and spending on housing and residential repair, maintenance and improvement. “A combination of UK trading profits and a €26 million realised profit on investment and property sales has substantially offset Irish trading losses, significant restructuring costs and interest charges incurred during the period. While trading conditions continue to be difficult, turnover has stabilised across the Group’s activities since April this year,” a management statement reads.
Throughout the period management has continued to rationalise the business, cutting costs aggressively. The reduction in Group overheads expected in 2009 is now estimated to exceed €70 million (up on the previously indicated savings of €55 million).
“The low interest rate environment and the steady trend of rising mortgage applications and loan approvals in the UK is encouraging in terms of indicating the prospect for an improvement in markets in the UK. The Group has now entered the seasonally stronger trading period of the second half of the year during which it expects to return to modest levels of profitable trading across the Group while the rationalisation and cost cutting measures taken to date continue to ensure that the Group is best placed to benefit from any recovery in the market.”