BUILDERS’ MERCHANTS and DIY group Grafton said turnover continued to stabilise during 2009, but fell 26 per cent compared with a year earlier.

In a trading update for the year ended December 31st, 2009, issued yesterday, the group said turnover was about €1.98 billion, compared to 2008’s €2.67 billion.

The second half of the year saw group merchanting turnover fall 14 per cent, compared to a 24 per cent decline in the first half.

DIY turnover was down 18 per cent for the last six months of the year, unchanged on the first half.

Manufacturing turnover also declined, falling 36 per cent in the second half compared to 49 per cent in the previous half.

There was some improvement seen in like-for-like sales per working day in the UK businesses, despite “challenging” conditions. The UK businesses, which account for more than two-thirds of group sales, fell 7 per cent in the second half. In the first half, they fell 18 per cent.

The company noted that “green shoots” in key UK sectoral indicators – increased mortgage lending, housing transactions, house building and some house price inflation – are leading to improving sales across its UK businesses.

However, in Ireland, like-for-like sales per working day in the second half were down 32 per cent, compared to a fall of 37 per cent in the first half.

Grafton said net debt was reduced throughout the year. It did not publish figures yesterday, but by the end of June, it had cut debt by €56 million to €380 million.

The update also indicated that Grafton’s cash position remained at least as strong as at the end of the first half of last year, when the company’s cash balances were €270 million.

Yesterday’s statement said the business continued “to be strongly cash generative” during the second half of 2009.

“While the group is cautious about the outlook for 2010, it will benefit from the cost-reduction and integration programme implemented over the last 18 months,” Grafton said.

“The group is well placed to capitalise on any improvement in its markets.”

Investors reacted positively to the statement. Grafton’s shares opened at €3.14 yesterday morning and hit a high of €3.30. The stock ended the day 1.9 per cent ahead at €3.20.

Mr O’Donoghue said in a research note yesterday:

“While we do not expect to make material adjustments to our 2010 forecasts, the signs are clearly encouraging.

“For instance, if half-yearly revenues have stabilised at circa €1 billion, this implies our 2010 revenue estimate of €1.9 billion may be a little light.”

He said that Grafton’s statement that its sales reached €1.98 billion in 2009 implied that revenues in the second half were level with the first at €990 million, a result that was ahead of expectations.