Published on 4 - March - 2010
Grafton mitigates weak DIY demand with job cutsMerchant and DIY chain compensates for 26% drop in sales with cost base reduction of €85m.
Grafton plc, which operates Woodie's DIY and Atlantic Homecare, as well as a number of merchants in the UK and Ireland, reported a €690m drop in revenue for the year to December 31, 2009. Pre-tax profit also dropped to €13.6m from €64.1m in 2008.
Turnover was down 35% to €638m in Ireland due to a fall in demand. However, the company announced a number of job cuts throughout the year in a bid to return the business to profitability. Grafton stated that a sharp fall in DIY volumes was mitigated by "improved operational efficiencies". In the first half of the year the firm announced 321 job cuts, with further redundancies in the second half of the year.
The group also brought together the Buildbase, Plumbase, Jacksons and specialist merchant operations into a single management and reporting structure, designed to significantly reduce overheads and employment costs.
Turnover in the UK, which includes the Buildbase, Plumbase, Jacksons and Selco merchant brands, was down 20% to €1.34bn, although Grafton reported a stabilisation in the second half of 2009 as demand indicators turned more positive.
The firm blames a sharp fall in market demand for the decline in sales but adds that "extensive measures" were taken to reduce the group's cost base by an annualised €85m.
Grafton executive chairman Michael Chadwick said: "Group sales in the second half of 2009 were similar to the first half. This stabilisation of sales, combined with the action taken to substantially reduce the cost base and integration benefits in our merchanting business, resulted in improved profitability during the second half of last year. Sales in the first two weeks of January 2010 were affected by severe adverse weather conditions. Since then sales have been close to expectations and last year with good increases into the UK new housing sector.
"The Group's strong businesses and financial strength position it to consolidate market share in its key markets. With a lower cost base and more integrated merchanting business, it is well placed to benefit from its operating leverage as markets recover."
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