9th May 2007 07:01
CRH PLC09 May 2007 9 May 2007 UPDATING STATEMENT CRH plc, the international building materials group, is issuing this update oncurrent trading conditions in conjunction with its Annual General Meeting whichis being held today at 3.00 pm in Dublin. Overall trading in the first four months of the year is ahead of last year witha particularly strong start from our operations in Europe. Development activityhas been brisk with approximately euro 400 million invested in acquisitions andinvestments, including the recently announced purchase of a 50% stake in DenizliCement in Turkey. We expect that the acquisition of publicly-quoted Swissbuilders merchanting group, Getaz Romang, will be completed by end-May adding afurther euro 350 million to development spend. Europe Materials has benefited significantly to date from very favourableseasonal weather conditions and a continuing positive demand and pricingenvironment in most of its major markets. In Ireland construction continues at ahigh level with lower activity in residential construction offset by a strongnon-residential sector and accelerating infrastructure investment. Ouroperations in Finland and the Baltic states have continued to experiencebroad-based growth and the new clinker line at the Lappeenranta plant hascommenced production. Demand across our Polish activities has beenexceptionally strong while our cement operation in the Ukraine has also enjoyeda positive start helped by the new coal mill. In Switzerland, cement sales arewell ahead of 2006 as are volumes in our downstream readymixed concrete,aggregates and asphalt businesses. In Iberia, our Spanish readymixed concreteand concrete products operations have enjoyed a favourable start, achieving goodsuccess in the recovery of higher input costs which had impacted margins in2006; however, our Portuguese joint venture Secil has experienced furtherreductions in construction activity in its home market which continues to beimpacted by cutbacks in public expenditure. In Europe Products, improving economies and favourable building conditionsthrough the winter months have contributed to a marked uplift in operatingperformance. Our Concrete Products group has enjoyed good growth across itsstructural concrete operations and a more substantial advance in itsarchitectural business, helped particularly by a strong pick-up in its Germanconcrete paving and landscape walling activities. Results to date in the ClayProducts group are well ahead with lower energy costs and the absence of theextensive production shutdowns which impacted performance in UK and Germanactivities in early 2006. In Building Products, our Construction Accessoriesbusinesses have outperformed with very positive trading to date; Insulationoperations have continued to build on the improvement recorded in 2006; thestrategically linked Fencing & Security (F&S), Daylight & Ventilation (D&V) andRoller Shutters & Awnings (RSA) businesses have seen good growth particularly intheir Dutch and German markets. Europe Distribution has also delivered a much improved performance thus far in2007. Our Builders Merchanting activities in Netherlands, France, Germany andSwitzerland are trading well with strong sales and operating profit advancesthrough the first four months of the year. Our business in Austria, which had adisappointing outturn in the first half of 2006, has continued the improvementevident in the second half. After a moderate 2006, sales growth in our BeneluxDIY activities has accelerated in recent months. In the United States, the severe weather conditions experienced in many ofAmericas Materials' markets to date have been in contrast to the mild weatherwhich boosted trading across these operations in the first half of last year.However, the highway construction season in these markets is, as normal, justgetting underway and, with encouraging backlogs, we anticipate that the strongpricing environment evident in 2006 will be maintained in the current year. Theintegration of Ashland Paving And Construction (APAC) is continuing with goodprogress on the ongoing realisation of synergies across its operations. APAC'strading performance in the first four months of 2007 has been ahead ofexpectations. The priority for Americas Materials in 2007 is to continue theimproving underlying trend in operating margin evident in its 2005 and 2006results, through the achievement of efficiency gains, cost reduction andadditional price improvement. Our Americas Products operations have had a challenging start with the ongoingdecline in new residential markets since mid 2006 leading to tough first halfcomparatives. This has been most evident in the Architectural Products Group's(APG) masonry markets and in MMI's residential-oriented fencing activities.However, APG's bagged soil and mulch activities, which disappointed in 2006,have shown a good improvement to date while the Glen Gery clay brick operationis benefiting from lower energy input costs relative to 2006. Our mainlynon-residential focussed Precast and Glass groups are continuing to benefit fromthe ongoing advance in non-residential construction, with backlogs in thePrecast Group in particular substantially ahead of last year's levels. Our SouthAmerican operations are performing well. Demand in the Americas Distribution Group's roofing & siding and interiorproducts businesses has been impacted by the harsh winter weather, the declinein new residential construction and price deflation in a number of productsegments. In addition the Florida roofing & siding repair maintenance andimprovement (RMI) market has slowed, having experienced exceptionally strongdemand from late 2004 through mid-2006 due to extensive storm damage during the2004 and 2005 hurricane seasons These circumstances have been partly offset bya good performance from the six acquisitions completed in 2006. The year has started well with a strong performance across our Europeanactivities outweighing more challenging conditions in the Americas. OverallGroup results to date are ahead of this time last year. With a continuingpositive backdrop for Europe Materials and improvements in Europe Products &Distribution's main markets, we look to step up the pace of organic profitgrowth in Europe in 2007. In the Americas, while the severe winter weatherpatterns and the ongoing decline in new residential construction will affectfirst half trading comparisons, we expect that comparatives in the moreimportant second half should be easier. This, combined with continuing growth innon-residential construction and a favourable funding and pricing backdrop forinfrastructure, should ensure a satisfactory overall Americas result for 2007. CRH's unique geographic, sectoral and product balance, with new US residentialconstruction accounting for less than 10% of the Group overall, has continued todeliver strongly to date in 2007 both in terms of overall trading performanceand development activity. While a weaker US Dollar will impact adversely on thetranslation of our US profits, with an ongoing focus on price and costeffectiveness, benefits from the record 2006 acquisition spend and a sustaineddevelopment emphasis, we expect to achieve further progress in 2007. This updating statement contains certain forward-looking statements as definedunder US legislation. By their nature, such statements involve uncertainty; as aconsequence, actual results and developments may differ from those expressed inor implied by such statements depending on a variety of factors including thespecific factors identified in this trading update and other factors discussedin our Annual Report on Form 20-F filed with the SEC. Contact CRH at Dublin 404 1000 (+353 1 404 1000) Liam O'Mahony, Chief ExecutiveMyles Lee, Finance DirectorEimear O'Flynn, Head of Investor RelationsMaeve Carton, Group Controller CRH plc, Belgard Castle, Clondalkin, Dublin 22, IrelandTELEPHONE +353.1.4041000 FAX +353.1.4041007E-MAIL [email protected] WEBSITE www.crh.comRegistered Office, 42 Fitzwilliam Square, Dublin 2, Ireland This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
CRH