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News : Irish Last Updated: Aug 25, 2010 - 8:39:25 AM


CRH reports 77% drop in H1 2010 profit to €25m
By Finfacts Team
Aug 24, 2010 - 8:50:24 AM

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CRH, the global building materials group, was formed through a merger in 1970 of two leading Irish public companies, Cement Limited (established in 1936) and Roadstone Limited (1949). CRH accounts for more than one third of market capitalisation on the Irish Stock Exchange and up to 90% of CRH's shares are held outside Ireland. About 2,000 of CRH's payroll of more than 94,000, are located in Ireland.

CRH plc, which is headquartered in Dublin, Ireland and is the second-biggest building materials supplier in the world, and the market leader in the United States, reported pre-tax profits of €25m for the six months to June (H1 2010) - - a 77% drop on the earnings of €108m in the same period last year.

The group said revenues fell by 8% to €7.66bn from €8.29bn and the 2010 interim dividend has been maintained at 18.5 cent - - in line with last year's level. CRH said that European economic indicators have been more encouraging although uncertainties remain. But it said that concerns relating to the recovery in the US have risen with a continuing flow of disappointing economic data in recent weeks.

Second-half US$ profitability in Americas Materials will be lower than last year compared with a previous estimate of an improved second half outturn. CRH said this combined with less favourable full year translation effects due to the strengthening of the euro indicates that the earlier expectation that overall group EBITDA (earnings before interest, taxes, depreciation, and amortization) for the second half of 2010 would exceed 2009’s level is unlikely to be achieved. Arising from this we currently expect that full-year EBITDA will show a decline of around 10% compared with the 2009 level of €1.8bn.

Myles Lee, Chief Executive, said today:"Since our 7th July Update, European economic indicators have been more encouraging although uncertainties remain; however, concerns relating to the recovery in the United States have increased with a continuing flow of disappointing economic data. Over this period, which represents the effective start of its main earnings season, our Americas Materials business has experienced weaker than expected volumes and more competitive pricing due to lower than anticipated levels of commercial construction and pull-backs in state and municipally funded projects. As a result second half US$ profitability in Americas Materials will be lower than last year compared with our previous estimate of an improved second half outturn. This combined with less favourable full year translation effects due to the strengthening of the euro indicates that our earlier expectation that overall Group EBITDA for the second half of 2010 would exceed 2009’s level is unlikely to be achieved. Arising from this we currently expect that full year Group EBITDA will show a decline of around 10% compared with the 2009 level of €1.8 billion.

With a robust balance sheet and an anticipated strong second-half cash inflow the Group is well positioned to respond to the current challenges and, against a tougher than anticipated second-half backdrop, is continuing to focus on cost reduction, cash generation and the identification and completion of suitable development opportunities."

2010 Interim Results

Goodbody's Robert Eason commented: "Since the July update, management notes that while European economic indicators have been encouraging, uncertainties remain. However, concerns over the pace of recovery in the US have increased. In particular, the US materials business has experienced weaker than expected volumes and pricing pressures, reflecting lower levels of commercial activity and pull back in state/local funding. As a result, H2 profits in this division will now be lower. This, in combination with lower currency translation effects, has resulted in management now indicating that its original guidance of H2 EBITDA being ahead is unlikely to be achieved. Overall, it is guiding group EBITDA to be down 10% to circa €1.6bn versus our expectation of €1.9bn, over 15% variance. At first glance, this translates into an EPS of circa 75c, significantly below (24%) our current forecast of 98.5c. We will review both our recommendation and forecasts following meeting management this morning. The one comforting fact is that it looks like acquisition spend is picking up with€86m spent on six transactions versus, €159m on 14 deals in H109."

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