Pretax profits at CRH declined by 27% in 2010

THE SHARE price of building materials giant CRH fell by almost 3 per cent yesterday after the company said pretax profits in 2010 had fallen 27 per cent at €534 million and revenues were flat at just over €17 billion.

The company released results showing that revenues were down 1 per cent at €17.17 billion in 2010, from €17.37 the previous year, while pre-tax profits after impairment charges amounted to €534 million.

The results were in line with guidance that the group had provided in a trading statement last November; its share price initially gained 0.8 per cent in Dublin yesterday morning. However, the shares fell back during the day and its stock closed in Dublin at €16.31, 2.89 per cent off its opening quote of €16.785. Just over 1.86 million of its shares were traded on the Irish market.

Earnings per share fell 31 per cent to 61.3 cent in 2010 from 88.3 cent the previous year. The group’s board is proposing to pay a final dividend of 44 cent a share, which will bring the full-year dividend to 62.5 cent, the same payout to stockholders as in 2009.

Group earnings before interest, tax, depreciation and amortisation (Ebitda), which included a once- off charge of €100 million to pay for long-term cost-reduction measures, were down 10 per cent at €1.61 billion.

Operating profits were down 27 per cent at €698 million. Cashflow from its operations came to €665 million, which the group said was partly a result of efforts to restrain capital spending.

CRH continued with its efforts to cut costs and has made cumulative savings of €2 billion since 2007. Of that, the group realised €500 million in savings in 2010.

Net debt at the end of 2010 was €3.5 billion, €200 million less than at the end of 2009. CRH managed this against the background of a year in which it spent €1 billion on acquisitions and development.

Overall, CRH spent €568 million on acquisitions during the year. This included increasing its stake in a German distributor to 98 per cent from 50 per cent and investing in its Chinese cement manufacturing joint venture Yatai.

The group said yesterday that cement volumes in Ireland, which account for less than 5 per cent of revenues, were down 23 per cent.

Chief executive Myles Lee said yesterday that cuts in spending on infrastructure and other public projects meant there was little likelihood of a pick-up in the construction industry this year. Euroconstruct was predicting further falls of 10 per cent here this year.

Energy is a key cost for CRH and accounts for 9.5 per cent of turnover. Mr Lee said the group had already hedged against a lot of its requirements, particularly in businesses such as heavy cement manufacture, which used a lot of energy, and bitumen, where oil was one of the main constituents.

A group statement said the rate of decline in revenues slowed through the second half of last year and added that sales to date in 2011 had improved considerably on the same period last year.

In Europe, it said the prospects for Ireland, Spain and Portugal remained extremely challenging. However, its businesses in Austria, Finland, Germany, Poland and Switzerland were likely grow this year.

The Benelux countries, Britain and France were likely to stay flat.

In the US, CRH said there was increasing evidence that residential building had reached the bottom of the trough, while current deadlock over federal budgets should be resolved shortly, which would release cash for infrastructure projects.

“Overall demand across the group appears to have stabilised in the past three months and, assuming no major market dislocations, we believe that it is reasonable to look forward to like-for-like revenue growth for 2011 as a whole,” the group said.