19th Aug 2014 08:27
LONDON (Alliance News) - Irish building materials group CRH PLC Tuesday said it swung to profit in the first half, despite facing a number of challenges in the US.
The company, which has operations across Europe and the Americas, was hit hard by the financial crisis and ensuing economic downturn, which weighed heavily on construction markets. Last year, it embarked on a review of its operations in an attempt to rebuild its profit margins and deliver better returns. It has completed the first stage of the review and put businesses that don't meet its new returns criteria up for sale.
In addition, the America's division has been hurt by weather patterns, particularly in the eastern half of the US, with very cold conditions limiting building activity.
Dublin-based CRH posted pretax profit of EUR61 million for the six months ended June 30, compared with a EUR71 million loss a year earlier, as revenue rose to EUR8.32 billion from EUR8.01 billion.
The company said its European materials division benefited from improved underlying demand in key markets together with favourable weather compared with the first half of 2013. As a result, like-for-like sales volumes were well ahead of 2013 overall, with Poland and Ukraine posting strong increases. Overall Europe materials sales revenue rose 9% to EUR1.09 billion from EUR993 million a year earlier.
CRH said Europe products revenue also improved, up 10% to EUR1.26 billion from EUR1.15 billion a year earlier. This was despite mixed construction activity in the company's European markets. It said positive impacts 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.
The distribution business, like CRH's other European operations, benefited from mild weather and good demand in the early months. Revenue for the unit rose 5% to EUR1.92 billion from EUR1.84 billion a year earlier.
Set against its gains in Europe, CRH said the US suffered its second successive year of severe weather conditions during the seasonally quiet early months of the year. As a result, revenue for CRH's Americas materials division remained broadly flat at EUR1.72 billion.
Americas distribution revenue also made few gains, with revenue up to USD761 million, from USD758 million.
Americas products revenue moved up 1% to EUR1.58 billion from EUR1.56 billion a year earlier. Construction and economic activity in the US continued to advance in 2014, and the improving trends resulted in stronger demand for our Americas products businesses in the first half, CRH said.
Looking ahead, CRH said assuming normal weather patterns and no major market dislocations, and with the benefit of contributions from acquisitions and cost saving measures, its continues to expect second-half group earnings before interest, taxation, depreciation and amortisation to be somewhat ahead of last year.
In the second half of 2013 the company posted EBITDA of EUR1.08 billion. EBITDA rose to EUR505 million in the first half of 2014 from EUR397 million a year before.
The company maintained its dividend at 18.5 cents.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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