Building supplier Grafton Group said today that it expected a challenging year after earnings in the first four months were hit by a weak sterling and slowing markets in Ireland and the UK.
'Group turnover to 30 April declined by 8% to €944m and reflects the adverse translation impact of a 12% decline in sterling against the euro,' it said in a trading statement ahead of its AGM in Dublin today. It added that Irish sales declined by 16%.
Grafton said profit before tax was 'as expected significantly down compared to the very strong performance' the same time last year.
However, it added that its strong financial position and cash flow leave it well placed to cope with the more challenging markets.
The company said that the reduction in new residential construction in Ireland is gathering pace as housing output adjusts to a more sustainable level. But it added that the sharp fall in housing starts and completions have led to a more difficult trading environment for its Irish merchanting business.
Turnover at its Irish retailing business was also lower due to the more subdued retail environment and the absence of the very favourable weather that stimulated exceptionally strong demand in March and April of last year.
However, it added that the new store in Carrick-on-Shannon - which opened in March - is trading ahead of expectations.
In the UK, Grafton said that the residential repair, maintenance and improvement market has shown resilience despite lower investment and spending on housing due to the credit crunch. It said its UK merchanting business experienced positive trading conditions in the first quarter with low single digit growth in like-for-like sales.
Grafton shares closed up three cent at €5.44 in Dublin.
