Building materials group Readymix has reported a near halving of its interim pretax profit, citing the effects of a slowdown in the Irish housing market.

In a statement to the stock exchange yesterday, the firm said the decline in the housing sector in the Republic has caused a fall in demand for blocks and concrete, while in the North volumes have also been weak. Recent figures for the Republic showed the number of housing starts fell 34 per cent in the first six months of the year and analysts have forecast further declines.

Pretax profit for the six months to the end of June fell to €16.3 million, from €32.3 million in the same period last year. Last year's figure however was boosted by one-time gains relating to the disposal of property.

At an operating level, excluding non-recurring items, profit fell almost 10 per cent to €9.1 million. Revenue was little changed at €119 million. The dividend was unchanged at 1.65 cent.

Analysts expressed disappointment with the figures, which came in behind expectations and all the main brokerages said they would be reassessing their full-year forecasts.

Peter Gunn, an analyst at Goodbody, said the results were particularly disappointing relative to the first-half trading update, which stated that operating profits were expected to be "slightly lower" than 2006 levels.

As a result he lowered his forecast for full-year operating profit from €21.9 million, to €20.3 million - little changed from last year's figure of €20.21 million. For the following year, however, he is forecasting an increase to €23.5 million as the company starts to reap the benefits of its cost-cutting plan.

The shares fell more than 8 per cent, to close down 18 cent, at €1.99, though volume was light.

During the first half of the year Readymix, whose key business is the production and distribution of concrete materials in Ireland and Britain, implemented a programme aimed at cutting costs by about €3.3 million a year.

Roger Gonzalez, the group's managing director, said this year was one of investment and change - the cost-cutting programme and rebranding cost the group about €800,000 in the first half - but that next year the group would start to see the benefits.

He also said that in the light of a slowing construction sector in Ireland, it had put in a good performance.

In the future, Mr Gonzalez said he expected the aggregates business, which currently accounts for two-thirds of profit, to increase as the Government spent more on infrastructure.

Separately, Readymix is expected to finalise the sale of part of its cement business to Northern firm Acheson & Glover within the next few weeks.