A leading Irish building materials supplier has said it is well placed to deal with uncertain industry conditions, despite reporting a drop in profits.

The Grafton Group revealed turnover during the six months ending on 30 June fell €0.2bn to €1.4 billion, compared to €1.6 billion for the same period last year.

Detailed in the latest trading update, Irish sales fell by 16% against the backdrop of, what the firm described as, a "challenging market".

However, the group has expressed confidence in the long-term profitability of its business.

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A spokesperson said: "The group remains confident about the long-term fundamentals and underlying value of its businesses in the UK and Ireland."

According to the firm, so far in 2008, Irish builders merchants and repair and maintenance firms have performed well, which has helped to reduce the impact of the slowdown in new builds.

The downturn has proved deeper and more rapid than anything previously predicted by Grafton.

The group's UK business is proving "resilient" despite a 4.5% fall in sales during May.

Grafton said: "The group has entered the second half of the year in a strong financial position with a reducing cost base and a profitable and cash generative business."

"This is well placed to deal effectively with a challenging trading environment in the UK and Ireland at a time of continued uncertainty in the credit markets."

(PR/JM)