Readymix warns on 2007 op profit as market slows

Readymix warns on 2007 op profit as market slows
Published: 06 February 2008

Irish cement supplier Readymix warned on Tuesday that operating profit before non-recurring items in 2007 is expected to be substantially below market expectations.  
In August Readymix posted a 50 per cent drop in operating profit for the first six months of 2007, pressured by a slowdown in Ireland’s housing sector.  
An end to Ireland’s decade-long property boom, when house prices quadrupled, is expected to lead to a sharp cooling in house building this year, which in turn is set to dampen the broader economy.  
"Although the year end results have not been finalised, it is clear that the operating profit before non-recurring items for 2007 will be substantially below market expectations and the operating profit achieved in 2006," Readymix said in a trading statement.  
It gave no further details and said a further statement would be issued in the coming weeks.  
Readymix’s key business is the production and distribution of concrete materials in the Republic of Ireland, Northern Ireland and Britain.  
"The weaker-than-expected profit outturn comes as little surprise given the backdrop of the decline in new residential construction in Ireland," Davy analyst Robert Gardiner wrote in a research note.  
Gardiner estimated Readymix derived around 60 percent of its Irish revenues from new housing construction.  
"In particular, the group’s concrete products, concrete block and ready-mixed concrete operations have been adversely affected," Gardiner said.