CRH's US operations offsetting weaker Europe

Wednesday 08 May 2013 18.00
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CRH reports 12% drop in European like for like sales
CRH reports 12% drop in European like for like sales
CRH gives no update on progress with search to replace CEO Myles Lee
CRH gives no update on progress with search to replace CEO Myles Lee

Building materials group CRH has predicted earnings growth in the second half of the year as its US operations continue to offset a weaker Europe.

In an interim management statement ahead of its AGM, CRH said that its European like for like sales so far this year are down by 12% due to the weak economic backdrop and prolonged winter conditions.

The company noted that its Irish and Spanish operations continued to face challenging market conditions, while its Polish and Ukrainian divisions were impacted by the prolonged winter conditions.

It said its American like for like sales eased by 2% with improving economic and construction trends offsetting bad weather conditions.

CRH said that a total of 15 acquisition and investments deals have been completed so far in 2013 at a total cost of about €385m.

The company said in its trading update that it expects core earnings in the second six months of the year, historically the company's more profitable period, to be ahead of last year's €1.04 billion, assuming normal weather patterns.

Earnings in the first six months of the year, however, are expected at around €400m, lower than the €480m reported the same time last year.

See how CRH shares performed in Dublin trade

The company reiterated guidance given in February that growth this year would be driven by its business in the US, where it is the main producer of asphalt for highway construction, offsetting a weaker performance in its European business.

A pick-up in residential construction and new measures in some states will help boost transport infrastructure projects, driving growth in the US in the second half, CRH said.

In Europe, the company said it would take further steps to cut costs, continuing with a programme which saved it €166m last year.

CRH gave no update on progress with the search to replace chief executive Myles Lee, who said in February he would step down at the end of this year.