Building materials group Heiton Holdings, soon to be rebranded as Heiton Group, is to cut its cost base and contain investment programmes in light of a slowdown in key markets, the company's annual general meeting heard yesterday.

Chairman Mr Richard Keatinge told shareholders that cost pressures, partly resulting from a decline in housing starts, had begun to affect the company's Irish operations over recent months. He said that while business volumes since April were up on those of 2000, the level of this growth was falling.

Speaking after the meeting, Heiton chief executive Mr Leo Martin acknowledged that the company was adopting a "very cautious" approach to future operations and would be conducting a "root and branch" review of costs, particularly in the Republic, where the group conducts up to 75 per cent of its business. This would cover, he said, cutbacks in non-essential costs and would probably entail a brake in hiring new or temporary employees. Existing staff have little cause for concern, however.

"There will be no major swathe of cuts," he said.

The company has already cut its cost base in Britain, where two sites have been consolidated into one against a backdrop of difficult trading conditions.

Heiton is retaining a balance between cuts and expansion however. The company is constantly on the lookout for acquisitions and always has a "pipeline" of potential targets, said Mr Martin.Mr Martin refused to speculate on the intentions of Grafton Group, which this year built its stake in Heiton to just under 19 per cent, apart from saying that it would be his board's duty to consider any offer that could provide value for shareholders. He went on to say that Heiton continued to operate on the basis that it would remain independent for the long term.

Heiton made pre-tax profits of €22.2 million (£17.5 million) in the year to April 2001.