Slower economic growth combined with higher labour and insurance costs have resulted in a 10 per cent drop in profits at building materials group Heitons.
In the 12 months to end-April 2002, the group reported pre-tax profits of €19.9 million. The figures were in line with stock market expectations. Despite the weaker performance, shareholders will receive a dividend for the year of 13.3 cents, a 6 per cent increase on 2001.
Group chief executive, Mr Leo Martin, said the results reflected the challenging environment, mainly in the Republic, where the bulk of its profits are generated.
He also signalled that in the first few months of the current financial year, trading conditions remained difficult but that cost reduction measures introduced last year would benefit the group this year. It is expected to yield annual savings of €2.9 million in 2002. "We will continue to grow all of our businesses through improving efficiencies and through organic and acquisitive growth, both geographically and segmentally," he said yesterday. Heitons will continue to look for "bolt-on" acquisitions but refused to elaborate on any such plans.
Group turnover increased by 14.5 per cent to €423 million. Its merchanting business, which includes Heiton Buckley and Cork Builders Providers, generated sales of €211.7 million, a 3.6 per cent increase on the previous year. It has been expanding this side of the business, upgrading branches in Waterford, Tralee, Sligo, Castlebar and Galway to create additional customer space. Turnover at its steel business declined by 2.3 per cent to €25.3 million with slower activity in the construction sector depressing volumes and squeezing margins.
Sam Hire, which rents tools and equipment to the construction sector, was also hit, with turnover down 7.3 per cent to €12.5 million. An improvement in economic conditions this year, together with further bolt-on acquisitions, should underpin a successful year for that part of the business, according to Mr Martin.
Atlantic Homecare put in a strong performance, with sales up 45 per cent to €61.8 million. It benefited from the opening of new stores in Swords and Letterkenny, and the revamp of stores in Stillorgan, Blanchardstown, Newbridge and Coolock.
Areas which were particularly strong were furniture, housewares, bathroom and lighting sections but the bad weather continues to hit sales of garden furniture and bar-b-ques. Its panelling centre also achieved growth with sales up 6.8 per cent to €29.4 million.
Heiton's UK business put in a strong performance with turnover up 48 per cent to €81.9 million, which was boosted by the contribution of Willis. Last year, the group entered the Polish market buying a 30 per cent stake in Betor Sklady Budowlane Sp Zoo, a builders merchants and readymix provider with eight outlets in western Poland.
