One of Ireland’s leading builders merchants and DIY group has reported a downturn in profits for the first quarter of 2008, with Irish sales down 16%.

Grafton Group PLC, who operates in the UK and Ireland, today released an Interim Management Statement, for the four months ended 30 April 2008.

In advance of the company's AGM, later today, the statement reports group sales in the four months declined by 8% to €944 million.

This reflects the adverse 12% weakening of the Sterling against the Euro. The group’s total Irish sales fell by 16%.

Group profit before tax was, as expected, significantly down compared to the very strong performance in the first four months of 2007.

Grafton said in the UK, the residential repair, maintenance and improvement (RMI) market has demonstrated resilience despite lower investment and spending on housing.

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In Ireland the reduction in new residential construction, which started in the second half of 2007 gathered pace as housing output adjusts to a more sustainable level.

The sharp fall in housing starts and completions has led to a more difficult trading environment for the Irish merchanting business.

The Irish RMI market, according to the company, appears to be holding up well and non-residential construction remains strong.

Grafton said, despite generally favourable income and employment conditions, growth in consumer spending in Ireland moderated from the high rates of recent years.

According to the report, turnover in the Irish retailing business was lower. Contributing factors included the more subdued retail environment and variable weather conditions, which had previously favourable effects on demand in March and April 2007.

However the company’s new store in Carrick-on-Shannon, which opened in March, traded ahead of expectations.

A Grafton Group spokesperson said: "In Ireland low growth in the economy is forecast due largely to the downturn in the residential construction market and slowdown in the international economy. A programme to achieve scale related synergies and bring costs more into line with lower volumes without compromising the market positions and medium term prospects of the Group's businesses is ongoing. The Group's strong financial position and cash flow leave it well placed to cope with these more challenging markets".

(PR)