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News : Irish Last Updated: Nov 10, 2010 - 6:37:34 AM

CRH says rate of decline in group sales has moderated; Increases stake in German merchant business to 98%
By Finfacts Team
Nov 9, 2010 - 6:23:55 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. CRH's payroll of about 80,000 in Dec 2009, fell from 94,000 in 2008. Less than 2,000 are located in Ireland.

CRH plc, which is headquartered in Dublin, Ireland, operates in 35 countries; is the second-biggest building materials supplier in the world and the market leader in the United States, today said that the rate of decline in group sales has moderated during recent months. It also announced that it has increased its stake in German merchant business to 98%.

The building materials giant said that the rate of decline in group sales has moderated during recent months, with like-for-like third quarter sales down 4% compared with last year. This follows the 10% like-for-like fall recorded for the first half of the year and brings the cumulative rate of decline in underlying sales to 8% for the nine months to end-September.

The trend for sales, combined with continuing benefits from our ongoing cost reduction measures has resulted, in an easing in the rate of profit decline in the third quarter compared to the first half of the year. Group earnings before interest, tax, depreciation and amortisation (EBITDA) for the third quarter of 2010 amounted to €0.7bn (2009: €0.75bn).  Cumulative EBITDA of €1.2bn for the nine months to the end of September compares with €1.4bn for the corresponding period of 2009.

CRH said in an Interim Management Statement that it continues to generate strong operating cash flows, with a traditional third quarter inflow and positive exchange translation effects resulting in a €0.8bn reduction in net debt from €4.8bn at June 30to €4bn at September 30, 2010. This figure comprised gross debt of €5.4bn and cash and liquid investments of €1.4bn.

CRH expects the rate of decline in like-for-like sales to continue to moderate in the final quarter and, assuming normal weather patterns for the remainder of the year. It anticipates EBITDA of approximately €0.4bn for the final quarter of 2010, broadly in line with the same period last year which was impacted by significant restructuring costs. Against this backdrop, CRH expects to report full-year EBITDA of approximately €1.6bn (2009: €1.8bn) for 2010 in line with the indications provided in its Interim Report. This is based on an expected average US$ exchange rate of 1.33* versus the euro (2009: 1.3948), and is stated after estimated charges of approximately €100m associated with the implementation of cost reduction plans (higher than the previous estimate of €58m, reflecting the cost of further measures initiated since mid-year).


CRH says acquired its initial 48% joint venture share in Bauking, the leading builders merchant and DIY operator in northern Germany, in December 2005. The business, which has grown organically and through acquisitions, now has a total of 128 branches and generated EBITDA of €35m on sales of €747m in 2009.

CRH said the purchase of an additional 50% of Bauking, which is expected to be completed before year-end, will greatly strengthen CRH's existing position in Germany, the largest construction market in Europe, providing an excellent platform for further growth and expanding the Group's exposure to the important repair, maintenance and improvement (RMI) construction sector.

Myles Lee, Chief Executive of CRH, commented: "We are delighted to take control of our successful Bauking joint venture in Germany. This transaction will bring our total German distribution sales to €0.85 billion in a fragmented market with significant expansion potential. The buyout is very much in keeping with our European Distribution strategy of investing in profitable businesses and attractive regions and strengthens our existing position as the third largest Building Materials distributor in Western Europe."

*Forecast average US$ exchange rate based on year to date US$/euro average of 1.32 and a projected rate of 1.39 for the remainder of 2010.

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