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 its half-year results which show both a drop in revenue and loss.
CRH shares have plunged over 6% in morning trade in Dublin and as the market cap leader, it has dragged down the overall market. See share price and ISEQ value.
The group reported a 3% fall in revenue in the six months to the end of June and it said that it expects challenging trading conditions in Europe for the rest of 2013. The fall in sales reflected a 6% reduction on a like-for-like basis, comprising a 7% fall in the four months, to April moderating to a 3% decline in May/June.
CRH had a pre-tax loss of €71m for the half year compared to a profit of €102m the same time last year. Revenues fell to just over €8bn. The loss per share for the period was -7.8c (2012: earnings per share 13.4c).
The company decided to maintain its interim dividend at last year's level of 18.5 cent per share.
Myles Lee, chief executive, said today: ”Although recent economic indicators suggest that the Eurozone may be emerging from recession, overall construction activity remains weak and we expect challenging trading conditions in Europe for the remainder of 2013. In the United States, economic growth is estimated to have strengthened over recent quarters and we expect second half EBITDA (Earnings before interest, tax, depreciation, amortisation and impairment charges) to be ahead of last year. Overall for CRH, we expect EBITDA for the second half of the year to be in line with last year (restated 2012: €1.04 billion). The Group continues to focus on cost management, operational excellence, value-adding acquisitions and strong cash generation, and is well-positioned to progress as markets recover.”
Robert Eason of Goodbody commented - - "CRH has reported first EBITDA of €397m, down from a restated figure of €523m (€480m if pension credit and CO2 are excluded) in H112. This compares to our forecast of €411m (consensus €405-406m) and guidance given in May of “c.€0.4bn”. The main variance was US Materials which was impacted by weather.
Europe continues to face challenging markets with lfl sales down 14% in Materials, -8% Products and -7% Distribution. These compare to -17%, -13% and -9%, respectively, for Jan-Apr, so the improvements are somewhat encouraging. European EBITDA of €176m (-43% yoy) was broadly in line with our expectations (€177m). US Materials lfl sales were down 9% which was behind our expectations of -2%, reflecting on-going adverse impact from weather. US P&D was broadly in line with our expectations.
On the outlook, management has guided the second half EBITDA to be in line with last year’s level versus previous guidance for it to be ahead. This translates into a 7% downgrade to FY13 EBITDA. The variance appears to be a slow pick-up in infrastructure in the US impacted by weather. We are encouraged by the improving trends in Europe with cement volumes now back in positive territory in Poland / Ukraine, while Switzerland and Finland are stable. As expected, the Netherlands continues to operate at a low level.
While the downgrade is disappointing, we feel the market was anticipating most of it. In addition, with increasing comfort on Europe, we see CRH offering the most upside given that it is one of the few companies which still has not seen margins recover."
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