Flat volumes at Jewson fail to lift Meyer: Builders' merchant awaits benefit of upturn

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THE RISE in house sales reported by both builders and estate agents has yet to feed through to an improvement in volumes at Jewson, the builders' merchant chain owned by Meyer International.

Richard Jewson, chairman, said he remains cautious about the economy: 'The tide has turned but it is not going to rush in.'

He estimates that three-quarters of the company's sales are for repairs and improvements, both of which are stimulated by house moves. He said that although there are signs that house sales have improved sharply since the start of the year, many of these transactions have yet to be completed. Once that happens, he expects sales volumes in his businesses to improve.

Despite the static volumes, prices have increased by 3 per cent on last year - although Mr Jewson said that some rises, such as the latest plasterboard increase, are not holding.

That upturn, combined with rigorous cost cutting during the recession, means profitability is starting to improve, Mr Jewson added.

Cost reductions helped the group maintain its operating profits at pounds 32.5m in the year to March. At the pre-tax level it made pounds 14.4m, compared with a pounds 19.9m loss in the previous period, after a pounds 43.6m loss on disposals. Earnings per share were 10.5p, against a 23.3p loss last time, but the final dividend was cut from 12.3p to 5.8p for a total of 10p (16.5p) - as the company warned when it launched its pounds 70m rights issue in April.

The cash call reduced debt from pounds 128.6m at the year-end to pounds 58.6m, equal to 18 per cent of net assets.

The market was unsettled by Mr Jewson's comments on volumes and his pessimistic comments about Germany, which accounted for just pounds 500,000 of the operating profits. The company's shares fell 7p to 375p.