BUILDING MERCHANTS Grafton Group, which owns the Atlantic Homecare and Woodies DIY chains, saw turnover fall by a third during the first three months of the year.

In a management statement issued yesterday, Grafton Group said it had faced “the most challenging trading conditions in decades” in the opening months of this year. Group sales for the first three months were €470 million, down €220 million from the same period in 2008.

Grafton’s manufacturing business, which has a high exposure to new housebuilding activity, suffered most during the period, with turnover in this segment down 50 per cent. Sales in its merchanting division fell 25 per cent.

The group’s retailing business held up slightly better than expected given the decline in consumer spending, but nonetheless sales in this area fell by 17 per cent.

Costcutting measures implemented during the period are expected to yield savings of up to €55 million in 2009.

“This will clearly help stem the downside to profits from lower volumes, but it remains a massive challenge,” Davy stockbrokers said in its morning note.

The group’s results for the first half of 2009 will reflect the challenging trading environment, the group said.

At the group’s annual general meeting yesterday, chief operating officer Leo Martin confirmed to shareholders that an ongoing process of reducing all costs was under way and that this would include “people costs”.

“We’re now talking about additional redundancies,” Mr Martin said.

The group has already reduced its workforce in Britain and Ireland by about 1,500 employees since the start of 2008. This was achieved through a combination of natural attrition and a voluntary redundancy scheme.

The group expects its employee number to fall by further 50 to 100 people during the current quarter, again through a policy of non-replacement combined with voluntary redundancies.

The group also announced the appointment of Charles Fisher as a non-executive director with effect from tomorrow. Mr Fisher was formerly chief executive and chairman of British builders merchant company Sharpe Fisher.

Peter Wood resigned as a director for personal reasons.

Grafton’s share price fell by more than 3 per cent yesterday to close at €2.54.