Building materials and DIY group Grafton today reported that pre-tax profit in the six months to June -- H1 2009 - - fell from €53.4m in the same period in 2008, to €3.7m. Revenue fell by 31% to just under €1 billion. Earnings per share dipped from 20.2 cent to 1.5 cent.
Executive chairman Michael Chadwick said:"Grafton's focus remains firmly on maximising operational efficiencies and cash generation. The intensity of the downturn in our markets has moderated and recent months have seen more stable sales levels. In the UK, housing starts are rising and leading indicators for repair, maintenance and improvement work are positive. Grafton has strong competitive operating units and a conservatively managed securely funded balance sheet with good liquidity. The group is confident of trading successfully through this major cyclical downturn and is well positioned to capitalise on upturns in activity in its markets."
Robert Eason of Goodbody commented: "Grafton has reported PBT (profit before tax) of €3.7m for the six months to the end of June. This compares to our forecast of €0.3m and compares to guidance that “a combination of UK trading profits and a €26m realised profit on investment and property sales has substantially offset Irish trading losses, significant restructuring costs and interest charges during the period”. Stripping out exceptionals (€28.2m disposal/investment gain and restructuring of €9.1m), underlying PBT losses were €15.4m versus €53m profit in H108. Reflecting difficult markets in both the UK and Ireland, group sales declined by 31% (-26% constant currency) to €990m (versus forecast of €989m and guidance of “circa €990m”).
Underlying operating losses of €4.1m were slightly ahead of our forecasts for losses of €6.1m. The key variance was merchanting profits of €3.3m versus forecasts of €1.0m, in particular the losses in Irish Merchanting were less than expected at €9.4m (forecast losses of €13m). On the outlook, it is no surprise to hear that management is more upbeat on the UK given positive trends in many of the key macro indicators. While trading conditions in Ireland are likely to remain difficult, there are more positive comments on the region, for example, “residential rmi activity is also forecast to decline further but to a much lesser extent”. With cost savings of €70m already achieved, it looks like there could be more by year-end given that the work is ongoing. Reflecting the slightly more positive outlook, Grafton are paying a dividend of 2.5c per share. Overall, the bias to forecasts now appear to be on the upside."
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