Associated Hardware posts losses of €3.2m due to bad debts
Published 25/11/2010 | 05:00
A LEADING supplier to the construction sector saw losses increase by a factor of six last year as the downturn continued to hammer the industry.
In accounts just filed, Associated Hardware, the builders' merchants and DIY group, posted a loss for 2009 of €3.2m, compared with a €516,588 loss in 2008. In 2006 the company made a profit of €1.3m.
The loss came on the back of turnover that plummeted by one-third to €106m. In the last year, the company said it had more than halved the number of employees, from 54 to 26.
Speaking to the Irish Independent, Associated's chief executive Mark Delaney said that bad debts played a huge role in the firm's slumping performance.
"We had to make provision for bad debts totalling €1.25m in 2009, which we have never had to do before.
"I suppose it's the nature of the business we're in now but it's been very tough. There are about 80pc fewer houses being built this year than in 2006.
"It's been the speed of the collapse that really caught out us and everyone else. There has really been very little time to reassess the business between things beginning to slip and the bottom falling out of the market.
Mr Delaney added that since taking over as chief executive in January 2009, he had focused on realigning the business to the retail end of things.
"The retail space has the advantage over the merchant business in that payments are immediate so we don't have to worry about bad debts, which was probably a weakness in the old business model.
Since taking over, Mr Delaney has also scaled back a number of initiatives, including a retail project outside of Dublin.
"We took a €1.29m hit on lease settlement and related fees.
"The lease on the retail project was only renegotiable after 15 years so given the circumstances we feel we made a prudent decision in cancelling it."
This year was "a struggle" for Associated Hardware but Mr Delaney was buoyant that a more efficient business could now be sustained.
"The bad weather in the first two weeks of the year essentially stopped work for most in the sector but the cost of daily business has been greatly reduced. We are optimistic about the year ahead but that optimism is based on a recovery in the wider economy."