CRH reports profit before tax of €95m in H1 2011 - - up €70m on 2010; Revenues rose 5%
By Finfacts Team
Aug 16, 2011 - 7:15 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 current payroll of about 75,000, 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 profit before tax of €95m in H1 2011, up €70m on H1 2010. Revenues rose 5%.

Sales revenue of €8.2bn for the first six months of 2011 was ahead of 2010 by €0.5bn (+7%); on a like-for-like basis, excluding the impact of acquisitions, divestments and translation, sales increased by +5%.

EBITDA (earnings before interest, taxes, depreciation, and amortization) of €574m for the period was ahead of 2010 (€520m). CRH said this improvement in EBITDA was led by the Products and Distribution operations in both Europe and the Americas. CRH said EBITDA is stated after charges of €16m (H1 2010: €31m) associated with the continuing cost reduction programme.

Depreciation and amortisation charges amounted to €390m (H1 2010: €402m), including impairment charges of €7m arising in the Europe Products business (H1 2010: nil).

Operating profit increased +56% to €184m. Profit before tax increased by €70m to €95m and earnings per share increased to 10.7c (H1 2010: 2.6c).

Net debt of €3.9bn at end-June was €0.8bn lower than at end-June 2010. With EBITDA/net interest cover at 7.0 times for the 12 months to June 2011 (2010: 6.5 times), and net debt/EBITDA at 2.4 times (June 2010: 2.8 times), CRH said it continues to have one of the strongest balance sheets in the sector.

Myles Lee, chief executive, said today: "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.

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."

Results detail

Barry Dixon of Davy commented: "Most of the profit was due to better-than-expected performance from the European Products & Distribution divisions, which reported EBITDA 17% and 55% respectively up on H1 2010. EBITDA for Europe overall increased by 18%.

EBITDA for the Americas region declined by 4%, including the adverse impact of currency translation. EBITDA from the Materials divisions was 21% lower with volumes better and price increases insufficient to offset input cost rises. EBITDA from the Products and Distribution divisions increased by 9% and 7% respectively

The dividend has been maintained at 18.5c per share.

CRH has completed seven acquisitions since end-June for a total consideration of €217m. This brings the year-to-date total spend to €380m (€245m in the same period last year).

Outlook remains muted; forecasts likely to remain unchanged; stock starting to look more interesting

In its outlook, management indicates that risk and uncertainty have increased in recent times. Against this backdrop, it still expects to deliver 'a year of progress.'

In our FY 2011 forecasts, we are assuming flat revenues on a like-for-like basis in H2 (+5% in H1), reflecting the slowdown.

It is unlikely that we will make any changes to our 2011 or 2012 forecasts at this time.

The stock is starting to look more interesting following the recent sell-off, particularly in light of our stable earnings forecasts."

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