The exceptionally mild winter in the US helped CRH beat market expectations yesterday when it announced a 16 per cent rise in profits before tax to €862 million for 2001. The extended construction season helped the US business compensate for a relatively flat performance by CRH's European operations, according to chief executive Mr Liam O'Mahony.
Turnover was €10.4 billion compared to €8.87 billion last time, but only €126 million of this was due to the organic growth of the existing business. Almost all of this relatively small contribution came from the US operation, with turnover in the existing European businesses actually slipping by €25 million, according to Mr Harry Sheridan, the finance director.
Acquisitions made in 2000 and 2001 accounted for most of the growth in sales, contributing €801 million and €481 million respectively to turnover. The turnover figure was also boosted to the tune of €182 million by favourable movements in the dollar versus CRH's reporting currency, the euro.
Mr Sheridan said the results showed that the company had retained its growth momentum. It was "something special" in the current climate to show the level of increase in sales and profits exhibited by CRH, he said. Margins across the group suffered however, with earnings before interest tax depreciation and amortisation falling from 14.5 per cent of sales to 14.1 per cent.
Trading conditions on mainland Europe "were very challenging and difficult", according to Mr O'Mahony. Germany in particular disappointed, with new housing starts - an important barometer - running at 300,000 compared to a previous peak of 600,000. The company's Polish operation also suffered as a result of what CRH considers a once-off adjustment in the economy as the government steers it towards membership of the European Union.
The extended construction season in the US accentuated the rebound from the "energy hit" that CRH took last year when oil prices in the US spiked, said Mr O'Mahony. The pre-cast concrete business in the US however continues to suffer from the fall- out from the slump in the telecoms sector, one of its major markets. Similarly the pre-cast business is exposed to the power generation sector in California and also suffered after a number of large contracts were delayed in the wake of the September 11th attacks on New York and Washington.
Sales in the Republic were flat but profits on the disposal of a number of surplus properties flattered the figures, with the Irish operation reporting an 8 per cent increase in earnings to €150 million. A similar €45 million profit on land sales helped the Britain and Northern Ireland division report a 10 per cent increase in earnings to €62 million against a background of 3 per cent growth in sales.
Mr Sheridan defended the decision to raise some €1.1 billion last March without any specific purpose. The rights issue - which increased the shares in issue by 15 per cent - depressed earnings per share last year which were 127.05 cent. This represents an increase of only 3 per cent when adjustments are made for the rights issue.
The dividend has been increased by 11 per cent to 23 cents. The shares fell 13 cents in Dublin to €19.80. Mr Sheridan said the company had to balance the negative impact of the rights issue against the advantages of having cash on its balance sheet to fund acquisitions.
