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Grafton to shed 1,000 jobs in huge shake-up
Sunday, September 07, 2008 By David Clerkin, Markets Correspondent
Building materials and DIY group Grafton is to shed up to 1,000 jobs - 8 per cent of its workforce - this year in response to collapsing housing markets in Ireland and Britain.

The group, whose businesses include DIY chains Woodies and Atlantic Homecare and builders merchants Chadwicks and Heiton Buckley, has already reduced staff headcount by 600 this year and will seek further cuts in staffing over the remainder of 2008.

The cuts are expected to be broadly split between Grafton’s Irish and British operations. Ireland accounts for approximately 40 per cent of group revenues, with Britain making up the balance.

Grafton finance director Colm O’Nuallain told analysts in recent days that the group was experiencing ‘‘a very difficult trading environment’’.

‘‘We are trying to right-size the business to the demand that’s out there, but we would expect to see further rationalisation costs in the second half,” he said. Grafton spent €2 million to implement redundancies in the first half but O’Nuallain said spending on further rationalisation would ‘‘double or more than double in the second half’’.

Headcount reductions already achieved will deliver cost savings of €20 million in a full year, helping to offset the sharp slide in Grafton’s profits.

Late last month, the group reported pre-tax profits of €53 million for the six months to June - half the €106 million in the same period last year - as revenues suffered from weaker demand for building materials.

The housebuilding slump resulted in like-for-like sales in Grafton’s merchanting business in Ireland falling 18 per cent. Its Irish DIY businesses also suffered from the economic downturn, with revenues down 10 per cent on the same period in 2007.

O’Nuallain said the group would continue to reduce staff numbers through a mixture of compulsory redundancies and a policy of not replacing staff who were departing voluntarily.

He said Grafton’s management had successfully negotiated its way through industry downturns in the past, and that this experience would pay dividends in the current phase of the business cycle.

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