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News : Irish Last Updated: Mar 3, 2010 - 5:35:28 AM

CRH reports 53% dip in 2009 profit before tax and impairment charges to €773m
By Finfacts Team
Mar 2, 2010 - 7:08:37 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 more than one third of market capitalisation on the Irish Stock Exchange and up to 90% of CRH's shares are held outside Ireland. About 2,000 of CRH's payroll of more than 94,000, 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, reported today that sales revenue fell 17% to €17.4bn in 2009, a decline of 19% on a like-for-like basis excluding acquisitions and translation effects. Profit before tax and impairment charges amounted to €773m  --  a fall of 53% compared with 2008.

CRH said after impairment charges, profit before tax of €732m was 55% lower than 2008. Earnings per share fell 58% to 88.3c (2008: 210.2c adjusted for the March 2009 Rights Issue). EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) amounted to €1.8bn after restructuring charges of €205 million. Depreciation and amortisation costs amounted to €848m (2008: €824m) and include impairment charges of €41m (2008: €14m). Operating profit fell 48% to €955m; excluding restructuring and impairment costs; operating profit was down 37%.

The group said significant working capital reduction together with capital expenditure restraint contributed to operating cash flow of €1.2bn, double the 2008 level of €0.6bn. Net debt reduced to €3.7bn (2008: €6.1bn). CRH said with year-end 2009 net debt to EBITDA of 2.1 times and 2009 EBITDA/net interest of 6.1 times, CRH has one of the most flexible balance sheets in its sector.

Myles Lee, Chief Executive, said today: "Residential and non-residential markets declined during 2009 in both Europe and the US, with government-funded infrastructure investment only partially compensating. We expect a difficult demand backdrop through much of 2010 with continuing declines in non-residential activity across our markets not helped by a poor start to the year as a result of prolonged severe weather in Europe and North America during January and February.

The significant adjustments to our cost base achieved over the past three years and our ongoing restructuring measures, together with our substantial balance sheet capacity, have strengthened the Group operationally and position CRH well to respond to upside demand developments and to avail of value-enhancing acquisition opportunities as these arise across our markets."

The board is recommending a final dividend of 44.0c cent per share, broadly in line with the adjusted final dividend of 43.7c for 2008. This gives a total dividend for the year of 62.5c, slightly ahead of the full-year 2008 dividend of 62.2c, with 2009 representing CRH’s 26th consecutive year of dividend growth.

Results detail

Goodbody analyst, Robert Eason, commented: As expected, outlook a touch more cautious - - "CRH has reported PBT (before impairment) of €772m, which is ahead of guidance of 'approximately €0.75 billion' and compares favourably to our forecast of €751m. The headline PBT is lower, at €732, due to an impairment charge of €41m. Excluding this charge, exceptionals of €205m and an adverse currency impact of €44m, the underlying decline in PBT is 38% (versus -69% in H1). At an adjusted EPS level, the outturn was 92.3c versus forecast of 91c, with the main variances being lower interest and tax charges, offsetting weaker outturns for European Materials and US Products.

Despite the significant decline in earnings, cashflow generation before acquisitions, equity issuance, currency effects and dividends was still significant, at €1.7bn, up from circa €1,1bn last year. This reflects a robust working capital performance and capex coming in below depreciation. As a result, net debt was reduced by €2.4bn to €3.7bn, which is ahead of our forecasts and guidance. As expected, the outlook is relatively cautious, with management expecting a difficult market backdrop for 2010, especially for non-residential markets in both Europe and the US. This has not been helped by a weather affected start to the year. In Europe, Poland is anticipated to be an area of strength, particularly given strong infrastructure.

In terms of the US, the timing of a residential recovery is still uncertain, while it flags the Federal highway programme has hit a bit of a speed bump, although a resolution is expected over the next days. Overall, we would interpret the outlook as being slightly more cautious than before."

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