Profit, sales rise at CRH

Pretax profit at CRH rose by €70 million in the first half of the year, driven by the group’s operations in Europe and the Americas.

Earnings per share were also ahead of last year and net debt was reduced during the six-month period. However, CRH signalled higher prices were on the cards this year as input costs rose.

In an interim statement this morning, the building materials group said first-half earnings before interest, tax, depreciation and amortisation was €574 million, while profit before tax was €95 million.

Sales revenue was 7 per cent higher than the same period in 2010, reaching €8.2 billion in the first half of the year. On a like-for-like basis, the rise was 5 per cent. Operating profit was 56 per cent higher at €184 million.

But in an interview, the group signalled it would miss analysts' expectations for earnings growth of 11 per cent this year, saying analysts had been expecting too much.

CRH's chief operating officer Albert Manifold said the group looked forward to a year of earnings progress.

"I'd be cautious and think you'd have to pull back on that. I think it'd be too much to hope for to get a full 10 per cent growth in the current year given the background and climate that is there," Mr Manifold said.

"There is so much uncertainty that it changes almost on a daily basis. We're watching somewhat from the sidelines to see what's happening in the major economies because that's what's going to drive so much of our activity in the second half."

In this morning's statement, the group said trading conditions were challenging in European countries where austerity measures were being implemented, but there were positive trends in construction activity in Switzerland and Finland, and demand picked up in Central and Eastern Europe.

Weakness in construction activity in Ireland and Spain impacted product volumes, with cement down 19 per cent in Ireland and readymixed concrete volumes declining in Spain. Portugal also saw some decline in cement volumes, declining 11 per cent.

The weaker dollar/euro exchange rate hit results for the Americas materials division, but sales increased by 6 per cent $2.2 billion, with a wider seasonal first-half operating loss of $102 million. The Americas distribution bsuiness, which trades as Allied, saw like-for-like sales rise 13 per cent.

Proceeds from disposals amounted to €392 million in the first half of the year, CRH divested itself of its European insulation and climate control operations to Kingspan. It also sold its stake in French distribution business Trialis to its original owners. Both sales generated €345 million for the group.

The group has spent €380 million in the year to date on acquisitions and investments, including seven transactions completed since the end of June.

In July, CRH agreed to buy the family-owned VVM group of businesses, which operates cement and concrete plants in Belgium and France, in a deal valued at over €100 million.

Meanwhile, the group was recently ordered by a French tribunal to sell its stake in its Portuguese joint cement manufacturing venture Secil for €570 million, ending a two-year row between the Irish company and partner Semapa.

Under the terms of the deal, Semapa has to pay nine times earnings to buy CRH’s 49 per cent stake in Secil, valuing it at €574 million. CRH originally paid €329 million for the stake and took on a €100 million share of its net debt when the deal was completed in 2004.

"The positive outcome for the first half of 2011 clearly demonstrates the advantages of CRH’s product and sectoral end-use balance and the benefits of the extensive reorganisation and restructuring measures implemented in response to the exceptionally difficult markets of recent years,” CRH chief executive Myles Lee said.

“Looking to the second half, downward revisions to economic growth estimates over recent months, combined with the extreme turbulence evident in world financial markets over the past few weeks, have added to market risks and uncertainties. Against this background we continue to focus on operational and commercial excellence, on delivering the price increases necessary to recover higher input costs in our businesses and on delivering a year of progress for CRH in 2011."

Additional reporting: Reuters