Irish
CRH reports 27% dip in 2010 profit before tax
By Finfacts Team
Mar 1, 2011 - 7:03 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 about 27% of the 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 and is the second-biggest building materials supplier in the world, and the market leader in the United States, today reported that profit before tax in 2010 fell 27% to €534m from €732m in 2009.

Sales revenue dipped 1% to €17.2bn but like-for-like sales fell 7%.

Debt fell in the year by €250m to €3.5bn.

Myles Lee, Chief Executive, said today: "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 level of price progress achieved in 2011 will be key to revenue growth and to the recovery of higher input costs. Acquisitions completed over the last eight months are expected to add to the Group’s performance in 2011 and with a strong balance sheet we have the capacity, where we see value, to capitalise on a growing pipeline of opportunities. With significant adjustments to our cost and operational base over the past three difficult years, we look to a year of progress in 2011 and to stronger upward momentum thereafter."

Results Presentation (pdf)

Goodbody's Robert Eason commented: "CRH has reported PBT of €534m, which compares to our forecast of €546m and company guidance of “between €0.52bn and €0.55bn” given in the November IMS. This was after an impairment charge of €124m (slightly higher than guided) and restructuring costs of €100m. Excluding these, adjusted PBT was down 22% to €758m (split -69% H1 and -12% H2) versus our expectation of €746m.

As expected, trends improved in the second half, with lfl of -3.5% versus -9.9% in H1. This translated into a 10% decline in EBITDA to €1,615m (versus guidance of 'approximately €1.6bn' and in line with forecasts), split -20% H1 and only a decline of 5% in H2. The European operations reported a 9% decline in EBITDA (-17% H1 and -3% H2) to €835m (versus guidance 'of the order of €0.85bn,' a stronger outturn for Distribution offset by a weaker Products) on sales that were down 4% (-7% lfl). Total US$ EBITDA declined 18% to US$1,034bn versus guidance of “in the order of $1bn”. This was slightly ahead of our forecasts, reflecting better outturns for Products & Distribution. As is typically the case, second half cashflow was strong with net debt declining by €1.3bn to €3,473m versus forecast of €3,640m. The key variance seems to be a much better working capital inflow of €256m versus forecast of €57m.

CRH has had a good start to the year, with sales showing a good improvement to date, helped by weak comparatives. On Europe, the outlook is challenging for Ireland / Spain / Portugal and good growth is expected in Finland / Poland / Germany / Switzerland / Austria, while a flatter outturn is anticipated in UK / Benelux / France.

In terms of the US, management note the increasing evidence that the residential market has bottomed and that growth will return to non-residential in 2012, while public infrastructure is forecast to be slightly down in 2011. Given this as a backdrop, management expects a return to lfl growth sales growth in 2011 (versus our expectation of -1%). However, as expected, price momentum will be key in terms of sales and cost recovery but it still looks for 'a year of progress in 2011,' with its cost take-out target now increased to €2bn (€1.8bn previously). Overall, management is clearly pitching the year ahead of our forecasts (80c)."


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