Builders' merchant Grafton records 12.5% drop in half-year sales

SALES AT builders' merchant and DIY specialist Grafton were 12.5 per cent down at €1.4 billion in the first six months of the year, according to a group statement released yesterday.

Grafton said in a trading update for the first half of 2008 that group turnover for the period was €1.4 billion, down €200 million on the same period last year.

Good levels of activity in repair, maintenance and improvement of homes in both Ireland and Britain helped ease the impact of the slump in construction in the two markets, the group said.

In Britain, turnover increased 6 per cent to £700 million, (€877 million) but Grafton said that the decline in the British currency against the euro meant that the growth in revenue will still translate into a loss.

Grafton said that its British business sells mainly into the "more resilient" repair market, and has very little exposure to new building.

Turnover in the group's Irish business was €520 million in what Grafton said was a "more challenging market". Irish sales were down 16 per cent for the half-year period, Grafton said. "The correction in the volume of housing starts and completions has been faster and deeper than expected," its statement said.

"While the group's exposure to the new-build proportion of the Irish housing market resulted in a decline in like-for-like sales, at current levels of trading less than 10 per cent of group turnover is exposed to this market."

Grafton said it is taking steps to boost productivity and cut costs in Ireland and Britain. This has so far cost the company €2 million, which it said has been absorbed into its operating costs. It added that its balance sheet remains strong and that it has €100 million in cash and €100 million in bank loans that it has yet to draw down. This is more than sufficient to fund its ongoing needs.