Building fixtures supplier GWA Group says it will further cut jobs and warned that already fragile demand could be squeezed by the banks jacking up mortgage rates this week.

GWA Group on Tuesday reported a 60 per cent drop in first half net product to $13.3 million from the prior corresponding six-month period to December 31, blaming the weak housing sector for the slump.

The company also said it incurred a $7.5 million hit because of restructuring expenses and a $6.7 million loss to discontinued operations, after it sold some of its non-core businesses.

The company said it had cut seven per cent of its workforce since October and was expecting to shed a further two per cent of workers by the end of June this year.

Managing director Peter Crowley said profits had suffered because of tough trading conditions for the housing sector.

“Clearly the market has been in a serious downturn since late calendar 2010,” Mr Crowley said.

The Reserve Bank of Australia’s decision not to cut interest rates in February and the commercial banks’ moves to raise mortgage rates may further weaken the housing sector, he said.

The big four banks – Commonwealth, ANZ, National Australia Bank and Westpac – in the past week all raised their variable mortgage rates, citing the higher cost of sourcing funds.

“The RBA’s intransigence on official cash rates and pressure on banks’ margins is likely to constrain any immediate recovery in our underlying demand,” Mr Crowley said.

He said he expected GWA sales to be down between three and six per cent in the second half of the financial year.

“As a consequence of lower sales volumes, trading EBIT (earnings before interest and tax) will be approximately 10 to 15 per cent down on the first half,” he said.

The company announced a nine per cent fall in first-half earnings before interest and tax for continuing operations.

RBS Morgans private client adviser Bill Bishop said the earnings result was poor but not as bad as some were expecting.

“Really, it could have been a lot worse,” Mr Bishop said.

“If the market had been completely surprised by this, I think (GWA’s share price) would have fallen a lot more.”

He said the result reflected difficult market conditions for the building and construction sector.

“It’s tough on the building game,” he said.

GWA Group maintained a fully franked interim dividend at 9.5 cents per share.

Its share price fell 17 cents or 6.85 per cent, at $2.31 on Tuesday.