Readymix issues profits warning

The building-materials group Readymix has warned investors that its profits for the first half of this year will be below last year's figures, saying intense competition is putting pressure on its profit margins. Siobhán Creaton, Finance Correspondent reports

Addressing its annual general meeting in Dublin yesterday, Readymix chairman Mr Martin Rafferty said it seemed likely that these trends would continue through the second quarter of this year and would lead to lower first-half profits.

At the half-year stage last year, the group reported pre-tax profits of €12.06 million, broadly unchanged from the same period in 2002. This year, that figure is expected to be below €12 million.

Shares in the firm dropped on the news, closing almost 2 per cent weaker at €1.72.

The chairman told the meeting that despite reasonable demand in the Republic for its products, further erosion of its margins had reduced profitability. "Profitability in Northern Ireland is being maintained and in the Isle of Man some softening in demand has led to volumes being behind budget."

Mr Rafferty said the company had been restructured on an all-Ireland basis and had recently appointed Mr Joe Doyle as managing director. "This development and refocusing of our business in the product areas of concrete and aggregates, with an emphasis on higher-value concrete products and cost reduction, will create a platform for future growth," according to Mr Rafferty.

He added that the group was continuing to examine its profit base and might consider making some disposals in the near term.

One shareholder noted the company's five-year performance, which was highlighted in its annual report, and told the meeting it made for "fairly dismal reading". Over that period, he said, Readymix's profits had remained largely unchanged despite the building boom in the Irish economy.

"Every other company in the sector seems to be increasing profits. I am amazed that no other shareholder has commented on this so far" he said.

Mr Rafferty said investors could not make a direct comparison between Readymix and other companies in the building materials sector.

"Over the past 20 years, we have done as well as anybody in this business. We have had some poor years but I do not agree that our results are out of kilter with companies that are directly comparable" he added.