Shares in building materials group CRH, the country's biggest stock exchange quoted company, rose sharply in Dublin after the company said it expected 'a number of positives' to make an impact on its performance in the second half of the year.
In a trading statement, it said these included further benefits from its cost-cutting measures undertaken in 2008 and the first half of 2009, more moderate energy costs and improving infrastructure spending in the US and some European markets.
The company said that, to compensate for the very tough conditions in the global building sector, it would dramatically step up its cost-cutting measures by cutting a further €550m over this year and next. That is on top of an already announced €900m worth of savings announced in January.
As part of ongoing cost-cutting, the company will suspend production at cement plants in Platin, Co Meath, and Limerick for a month to allow for maintenance to be carried out. Workers will be forced to take leave and some may have to take unpaid leave. The statement sent its shares sharply higher in Dublin. By the close, CRH was up 82 cent - more than 5% - at €15.98.
CRH expects H1 profits to drop to €100m
CRH said that while its rate of profit decline in the second quarter eased substantially compared with the first quarter, the world recession led to weaker than anticipated trading in May and June. The first six months of the year is traditionally a less profitable time for the company.
CRH, which now accounts for over 31% of the value of the Dublin ISEQ index, said its H1 profit before tax is expected to be about €100m after restructuring costs of about €75m and currency translation impacts of about €20m. This compares to a profit of €600m the same time last year.
The group noted that while second half profitability will be lower than in 2008, the rate of decline is expected to improve compared with the first half of 2009.
CRH said that demand in Ireland continues to run at about half last year's levels and it added that it sees little or no pick-up in the second half of the year.
The company said that it spent €300m on acquisitions and investments in the first half of 2009. This included the purchase of a 26% stake in Yatai Cement in China, plus another six deals across its materials and distribution divisions.
It said it has 'significant financing capacity', boosted by its right issue last March. In today's trading statement, it said it is well positioned to take advantage of appropriate development prospects.
'While we are beginning to see an increased flow of potential opportunities, in the current economic climate our development effects remain focussed on transactions that offer compelling value and exceptional strategic fit,' the statement added.
