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News : Irish Last Updated: Apr 24, 2009 - 5:31:05 PM


CRH expects 2008 profit to exceed €1.6 billion; Outlook to improve in second half of 2009
By Finfacts Team
Jan 6, 2009 - 7:45:36 AM

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CRH, the international building materials said today in a trading update, that it currently expects to deliver 2008 profit before tax in excess of €1.6 billion which would represent a mid-teen percentage decline on the 2007 outcome of €1.904 billion, in line with guidance provided in the Interim Management Statement of 11 November. CRH also announced second half 2008 acquisitions of 273 million bringing full year spend to approximately 1 billion and on the outlook for 2009, the group says it is extremely challenging, given the severe impact of ongoing turmoil in financial markets on both developed and emerging economies across the world. However, the group said that there are a number of positives with lower energy costs, the recent step-up in interest rate reductions and increasing prospects for a significant US infrastructure stimulus package. CRH says while these factors are unlikely to offset the negative headwinds in the first half of 2009, they should begin to influence sentiment and activity later in the year.

CRH said in respect of 2008, it anticipates a lesser reduction in earnings per share as a result of share buyback and the lower expected full year percentage tax charge which was noted in earlier announcements. This, it says would represent a significant achievement against a tough industry backdrop.

The expected 2008 profit outturn is after an adverse translation impact of approximately €50 million principally attributable to a weaker average US$/euro exchange rate of 1.4708 (2007: 1.3705).

While the first half of the year saw improved overall operating profit in Europe, mainly reflecting strong growth from its Materials operations in Poland and Ukraine, this was more than offset by declines from American operations. As a result, first half profit before tax fell by €64 million or 10% to €0.606 billion (2007: €0.670 billion).

In the second half, the group anticipates that second half profit before tax will show a high-teen percentage decline on the 2007 outturn of euro 1.234 billion.

It expects that full year profit on disposals of fixed assets will exceed last year's level of €57 million, while the Group's share of associates' profit after tax is expected to be slightly lower than 2007 (€64 million).

Development

Total acquisition spend in 2008 amounted to approximately €1 billion. First half expenditure of €0.7 billion included the purchase of a 45% stake in Indian cement manufacturer My Home Industries and 100% of UK construction accessories producer Ancon together with 35 other acquisitions across the Group's operations.

Completion of the €2 billion Yatai investment in China, announced in January 2008, is expected shortly while finalisation of the €0.4 billion Pavestone acquisition in the United States, announced in March 2008, remains dependent on various regulatory approvals.

2008 capital expenditure of approximately €1 billion will show little change on 2007 despite higher 2008 spending on previously announced cement facilities in Ireland, Poland, Ukraine and the United States.

Share Buyback

CRH says as announced on 7 November, in light of the stresses in financial markets, and to maintain maximum financial flexibility, the share repurchase programme launched on 3 January 2008, which was limited to a maximum of 5% of the 547 million Ordinary shares in issue at December 2007, was terminated following the repurchase of approximately 18.2 million shares, equivalent to 3.3% of Ordinary Shares in issue at year-end 2007, at an average price of €22.30 per share.

Myles Lee, CRH Chief Executive, said: “In the deteriorating economic environment, we significantly curtailed development activity as the year progressed resulting in a second-half spend of approximately euro 0.3 billion on 16 initiatives which enhance CRH's market presence and leadership positions across a number of its operations. With a challenging trading backdrop for many of our businesses, management's emphasis is firmly concentrated on operational delivery and, as a result, development activity continues to be limited to opportunities that offer compelling value and exceptional strategic fit.”

Trading Update Statement

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