CRH maintains full year profit guidance

Tuesday 19 August 2014 18.36
CRH's half yearly sales revenues rise by 4%
CRH's half yearly sales revenues rise by 4%

Building materials group CRH has reported pre-tax profits of €61m for the six months to the end of June, an improvement of €132m on the loss of €71m the company reported the same time last year.

Revenue for the six month period rose by 4% to €8.324 billion from €8 billion, while operating profits increased to €171m from €41m.

Sales were up 7% in Europe and 1% in the Americas.

CRH said it will maintain the 2014 interim dividend at last year's level of 18.5 cent per share. 

Total acquisition/investment activity in the first half of the year came to €130m with a total of 11 transactions. These deals are expected to contribute about €114m in sales. 

The company said that 2014 had seen an encouraging start with favourable weather in Europe and continuing recovery in the US. 

But it added that after the strong start in Europe, it has seen an easing of trends in recent months. 

It said that while the uncertain political backdrop in Ukraine remains a cause for concern, it expects its second half performance there to be broadly in line with last year.

Ukraine is one of CRH's main eastern European markets, accounting for €24m of EBITDA last year.

It said that the unrest in Ukraine is having less of an impact in the west of the country than in the east, and its like for like cement volumes were up 20% in the first six months of 2014. It also said that Ukraine benefited from the mild weather of the first half of the year.

Against the backdrop of an improving US economy, CRH said it expects an improvement in housing and non-residential construction this year, with infrastructure activity likely to be "stable". 

"Assuming normal weather patterns and no major market dislocations, and with the benefit of contributions from acquisitions and cost saving measures, we continue to expect second half group EBITDA to be somewhat ahead of last year," commented CRH's chief executive Albert Manifold.

The company, which said in February that it would sell at least 10% of net assets in a portfolio review, said its divestment programme would likely be worth between €1.5 billion and €2 billion.

CRH shares closed 1.8 lower in Dublin trade following the release.

How CRH's divisions performed in H1

CRH said that revenues at its Europe Materials division rose by 9% to €1.087 billion on an operating profit of €35m with its operations boosted by improved underlying demand in key markets and favourable weather conditions. 

It noted that construction activity in Ireland has started to rise, albeit from a very low base. "With the benefit of cost reduction initiatives and the resizing of our business over the past few years, overall profit and margin improved and we are in a strong position to leverage from the modest growth," the company added.

Sales at the company's Europe Products division increased by 10% to €1.261 billion while operating profits for the six months to the end of June rose to €57m from €3m. It said the positive impact of strong residential demand in the UK, underlying progress in Denmark and stabilising volumes in the Benelux and Germany were partially offset by continuing declines in France.

Operating profits at CRH's Europe Distribution division rose by 65% to €43 from €26m while revenues increased by 5% to €1.922 billion as the division was also boosted by mild weather and good demand.

CRH said that sales revenues at its Americas Materials division were flat at €1.7 billion while operating losses fell to €61m from €79m the same time last year. The company said that severe weather conditions again affected its major US markets but that volumes rose on the back of improving residential and non-residential demand.

Its Americas Products unit saw revenues inching 1% higher to €1.575 billion while operating profits slipped 9% to €80m from €88m. 

Sales revenue at its Americas Distribution business fell to €761m from €758m while operating profits rose to €17m from €14m with improvements in the interior product segment more than offsetting reduced activity in the weather affected exterior products division.