CRH says 2014 will be year of profit growth after reporting 2013 loss
By Finfacts Team
Feb 25, 2014 - 9:10 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). About 90% of CRH's shares are held outside Ireland. CRH's has a payroll of 75,000 and less than 1,500 are located in Ireland. It moved its primary stock exchange listing to London in 2011 and is a FTSE 100 company.

CRH plc, Europe's biggest building materials group, headquartered in Dublin and  with a primary listing in London, said today that 2014 will be year of profit growth after reporting a 2013 loss.

Following a first half that was severely impacted by bad weather, CRH said revenue rose 2% in the second half of the year, with a smaller fall in Europe offset by a 5% rise in the United States.

The group reported pre-tax losses of €215m for the year to the end of December compared to a pre-tax profit of €646m in 2012.

Revenues fell to €18.03bn from €18.08bn following a 6% dip in the first half of the year.

Operating profits slid by 10% to €750m from €833m while cost savings of €195m were achieved.

The board is recommending a final dividend of 44 cent per share, in line with 2012. This amounts to a total dividend for the year of 62.5 cent, which is unchanged from 2012.

Results detail

Robert Eason of Goodbody comments - - "CRH has reported FY13 EBITDA of €1,475m (-6% yoy), which is 1% ahead of Goodbody’s forecast of €1,460m. This compares to management’s guidance of c. €1,440m and implies 4% growth in Q4 versus +3% in Q3. The key variance is a better than expected performance in European Distribution (EBITDA 13% ahead of Goodbody) which a offset slight miss (-3%) in US Products. At the adjusted eps level CRH has delivered eps of 65c in line with estimates.

Lfl sales in Europe have improved to -1% yoy in H213 compared to -10% reported in H113, highlighting the stabilisation in European construction markets. The Distribution business was the stand out performer in Europe coming in 13% ahead of our forecasts and management guidance driven by a 50bps beat on margins. The US recovery continues with lfl sales +5% yoy versus -1% in H113. Divisional performances were in line with both forecasts and guidance given by management in November.

CRH has announced that 10% of the net asset base has been identified for orderly disposal, with another 20% of the net asset base to undergo further review for potential restructuring. This has resulted in an impairment charge of c. €750m of which one third will be attributed to the European Products division, which should come as no surprise.

The new CEO is relatively upbeat on the outlook for 2014, stating that 2013 is expected to be the trough in earnings for CRH with profit growth expected in 2014 as H213 activity levels were encouraging and while early in the season, trading in 2014 is ahead yoy.

This is a solid set of results. CRH’s exposure to the late cycle recovery in the US, stabilising markets in Europe and the upside potential from the asset review process all underpin our view that the company can continue to outperform peers."

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