CRH profits to slow more than predicted

Building materials group CRH said its full-year pre-tax profit would now decline by a low to mid-teens percentage rate, worse than the 10% fall anticipated in August.

This is as a result of an increasingly cautious business climate around the world, the company said.

In an interim management statement this morning, CRH said that since that prediction in August, financial markets have been impacted by an 'unprecedented series of events'.

The change in sentiment has been most evident in Europe, which had previously only been moderately affected by the fall-out from the US sub-prime crisis.

However, in contrast, overall trading in its American activites has evolved broadly in line with the group's earlier predictions while the US dollar has strengthened.

CRH said that construction growth in Poland and Ukraine, which had more than compensated for falls in the Irish and Spanish markets in the first half of the year, has now also slowed over the last six months.

It says that its Europe Materials division is now expected to report only modest profit growth for the second half of the year with full year operating profit now set to show a high single digit percentage increase.

Against a backdrop of slower trading patterns and increasing 'stress' in the UK housing market, operating profits in its Europe Products division is now predicted to be about 25% behind the 2007 results.

Trading across CRH's merchanting operations has weakened along with the economic downdown, and the company now expects its Europe Distribution unit to report its full year operating profits to fall by a mid to high single digit percentage.

CRH also said it expects a mid-teen percentage decline in full year operating profits in its Amercian operations.

CRH says the outlook for 2009 is challenging given the growing impact of ongoing turmoil in financial markets on the broader world economy. However, it adds that falling energy costs, interest rate reductions, a potential US infrastructure stimulus package and a stronger dollar are some positives for the group.

CRH shares were up 76 cent to €17.37 in Dublin this afternoon.