3rd May 2006 15:05
CRH PLC03 May 2006 CHAIRMAN'S UPDATING STATEMENTANNUAL GENERAL MEETING - 3 MAY 2006 Overall trading in the first four months of the year has been favourable with inparticular a strong start from our operations in the Americas. The year has alsostarted well on the development front with the completion of over 20acquisitions for a total cost of approximately euro 700 million. This includesthe purchase of the Halfen-Deha construction accessories group in Europe, whichwas completed and announced yesterday, and of MMI Products, Inc., the newproduct platform for the Group in the United States, which was acquired lastFriday, 28 April. Before providing an update on trading to date, I would like to comment on therecent announcement that John Wittstock, formerly Managing Director of EuropeProducts & Distribution and an executive Director, has decided for personalreasons to return to the United States and has resigned from the Board. We arepleased that John has agreed to assume overall responsibility for MMI Products.John has made an outstanding contribution to CRH in his various senior executiveroles in both the United States and Europe, and as a Director. The Board wisheshim well in his new role with MMI. Turning now to operations, in Europe Materials, the strong trading patternsevident in Ireland and Finland in the latter months of 2005 have continued into2006 helped by generally broad-based construction activity in both markets. InSwitzerland, the completion of a major infrastructure project has as expectedled to a decline in our cement sales; however, demand remains stable in ourunderlying residential and non-residential markets. Poland has recovered wellfrom a weather affected start and demand is expected to remain good for the restof the year. Despite extreme seasonal winter weather which has negativelyimpacted cement sales to date the full year outlook for the Ukraine remainspositive. In Iberia, our Spanish operations have enjoyed a favourable start;however, our Portuguese joint venture Secil has seen reduced constructionactivity in its home market as the Government continues to rein in publicexpenditure. In Europe Products, despite continuing subdued markets the early months haveseen some progress. Our Concrete group is benefiting from stronger demand forstructural products in the Benelux, France and Denmark while its sand-lime brickbusiness continues to perform well. However, demand for architectural concreteproducts in the Benelux, Germany and UK has yet to show evidence of sustainedpick-up. Production shut-downs in our UK and German Clay Products activitiesover the winter months, implemented in order to better balance supply and demandand to avoid seasonal price peaks in volatile gas markets, have had an adverseimpact on early results. In Building Products, our Insulation activities haveseen an improved performance while overall trading to date for our Fencing &Security, Daylight & Ventilation and Construction Accessories businesses is inline with expectations. Although the early months of 2006 have seen a strong pick-up in overall Dutchretail sentiment, Europe Distribution has not yet experienced this to asignificant extent in its DIY operations. On a more positive note activity inBuilders Merchants in the Netherlands, France and Switzerland has gatheredmomentum as we move towards the seasonally busier months. While the integrationof Quester, the leading Austrian builders merchant acquired in October 2005, iswell underway business to date has been somewhat disappointing. Bauking, thebuilders merchant and DIY operator with 108 branches in northern Germany inwhich CRH acquired a 48% stake last December, is performing to expectations. In the United States, as is normal, the highway construction season in many ofAmericas Materials market areas has yet to get fully underway. However, ourconstruction backlogs are encouraging and demand to date has been strong, helpedby a mild winter which has facilitated early private sector constructionactivity. Following the good overall margin improvement achieved in 2005, thekey challenge for 2006 is to once again offset the impact of ongoing energy andinput cost increases through effective pricing strategies and operationalefficiencies. Americas Products operations have had an excellent start to the year helped bygenerally favourable weather, continuing good levels of US housing activity andfurther improvement in US non-residential construction demand. Our Precast,Architectural Products and Glass groups are all showing strong progress to datein 2006, while our South American operations are also performing well. Therecently completed MMI acquisition delivers a new platform for expansion inproduct segments which offer significant organic and development opportunities. Following its record performance in 2005, our Americas Distribution business hasexperienced continued positive trading conditions in the first four months inboth its roofing & siding and interior products activities. The Florida markethas remained particularly buoyant. Overall results to date are well ahead oflast year. On both the operational and development fronts, the CRH management team headedby Liam O'Mahony continues to deliver strongly for all the stakeholders in CRH.Liam will reach 60 later this year, by which time he will have served 6 years inthe role. While the general historical practice has been for senior executivesto retire at or about the age of 60, there is not a rigid policy in this regard.I am pleased to be able to say that, at the request of the Board, Liam hasagreed to continue as Chief Executive until mid-2008. We look forward to ongoingsuccess for CRH under Liam's strong leadership. Returning to the outlook for 2006, recent weeks have seen further increases inenergy costs in response to world political tensions and concerns over supply/demand balance. Accordingly, as in 2005, the continued recovery of thesesignificant energy cost increases will be key to the outcome for CRH for thecurrent year. The early months of 2006 have seen good momentum across our businesses andfurther success on the acquisition front. While as always risks remain, with acontinuing focus on operational effectiveness and ongoing acquisition benefitswe look forward with confidence as we move into the busier trading months acrossour operations. ---- 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. 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:
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