Building materials group CRH today cut its full-year earnings outlook, citing an unusually long period of bad weather that produced a sharp fall in first-half earnings.
CRH said that the historically more profitable second half would now be in line with the second half of 2012. Its shares fell by 4.6% in Dublin trade this afternoon.
The company today reported a 3% fall in revenue for the six months to the end of June, and said it expects challenging trading conditions in Europe for the rest of 2013.
CRH posted a pre-tax loss of €71m for the half year compared to a profit of €102m the same time last year. Revenues were down 3% to just over €8 billion.
The company has decided to maintain its interim dividend at last year's level of 18.5 cent per share.
Myles Lee, CRH's chief executive, said that overall construction activity in Europe remains weak despite the recent economic indicators which suggest that the euro zone may be emerging from recession.and is well positioned to progress as markets recover,'' Mr Lee said in today's results statement.
''In the United States, economic growth is estimated to have strengthened over recent quarters and we expect second half EBITDA to be ahead of last year,'' Mr Lee added.
CRH said that its ongoing cost reduction initiatives delivered incremental savings of €111m in the first half of 2013, which brings cumulative savings under the cost reduction programme to €2.3 billion since 2007.
It said that due to the continued weakness in its key European markets, it is accelerating the programme of adjustments to its European cost base in an effort to enhance its competitive position.
The company said that its operations in Ireland and Spain continued to face ''very challenging market conditions'', although overall volumes benefited from higher exports as it expanded its cement importation capacity in the UK.
Construction activity continued to fall in both countries, although CRH noted that the fall was at a more moderate pace, while the benefits of its restructuring programmes were also seen.
In Dublin, CRH shares closed down 4.6% at €16.01 on the back of the company's results.
Breakdown of CRH's Europe and US divisions
Breaking down the divisions, sales revenue at its Europe materials unit fell by 13% to €993m while operating losses came in at €10m as the six month period was impacted by severe winter weather conditions which continued into April and were followed by unusually wet weather in May and early June.
Sales revenues at its Europe Products division decreased by 8% to €1.147 billion while operating profits slumped by 91% to €3m from €34m the same time last year. The division was also impacted by the bad weather conditions which severely disrupted new construction activity.
The company said that conditions in the Netherlands continued to deteriorate, while Germany, Belgium and France were relatively more resilient and the UK was the only major market to show a growth in sales.
Revenues at CRH's Europe distribution division eased by 3% to €1.837 billion while operating profits were down 54% to €26m from €57m with the division impacted by weak activity, especially in the Netherlands which accounts for about 30% of the division's sales.
Operating losses at CRH's Americas Materials division came in at €79m from €66m the same time last year. Sales revenue fell by 7% to €1.71 billion as publicly funded infrastructure activity was most affected by much more difficult weather conditions than in the first half of 2012.
Sales revenues at the company's Americas Products division rose by 9% to €1.562 billion while operating profits jumped by 35% to €88m from €65m as the improving US residential trends resulted in stronger demand for CRH's products in the first six months of the year.
The company's Americas Distribution unit also saw sales revenues rising by 6% to €758m while operating profits soared 44% to €13m from €9m in the six month period.
''The group continues to focus on cost management, operational excellence, value-added acquisitions and strong cash generation, and is well positioned to progress as markets recover,'' Mr Lee said in today's results statement.
