4th Mar 2008 07:01
CRH PLC04 March 2008 RECORD 2007 RESULTS - 15 CONSECUTIVE YEARS OF GROWTH Year ended 31st December 2007 2006 % change euro m euro mRevenue 20,992 18,737 + 12%EBITDA* 2,860 2,456 + 16%Operating profit* 2,086 1,767 + 18%Profit on disposal of fixed assets 57 40 + 43%Profit before tax 1,904 1,602 + 19% euro cent euro centEarnings per share 262.7 224.3 + 17%Cash earnings per share 404.9 352.1 + 15%Dividend 68 52 + 31% * EBITDA and operating profit are stated before profit on disposal of fixedassets. • CRH has delivered another very strong performance in 2007 with full yearprofit before tax of euro 1,904 million, a 19% increase on 2006 (euro 1,602million). Earnings per share increased 17% to 262.7c (2006: 224.3c). Thisrepresents CRH's 15th consecutive year of profit and earnings growth. • Operating profit in our Europe businesses grew euro 292 million to euro1,106 million, up 36%. Organic growth, which accounted for euro 178 million or61% of the increase, was more than double 2006 organic growth of euro 81million. • Operating profit for the Americas operations increased by euro 27 million toeuro 980 million, up 3%. Robust organic performances in our Materials andProducts activities plus an excellent contribution from APAC were offset bylower profits in Distribution and a euro 78 million impact due to a weaker US$. • Overall operating profit margin increased to 9.9% (2006: 9.4%) • Profit on disposal of fixed assets at euro 57 million was ahead of 2006(euro 40 million). It is anticipated that a strong level of profit on disposalswill be an ongoing feature of the Group's activities. • Expenditure on acquisitions and investments during 2007 totalled a recordeuro 2.2 billion. Nevertheless, EBITDA/net interest cover remained high at 9.4times for the year (2006: 9.7 times), well above the Group's comfort level ofapproximately 6 times. • The proposed 31% total dividend increase for 2007 makes this the 24thconsecutive year of dividend growth, and follows a 33% increase in 2006reflecting the phased adjustment in dividend cover from 4.8 times in 2005 to atarget of 3.5 times for 2008. • In January CRH announced a share repurchase programme of up to 5% of the 547million shares then in issue. A total of approximately 6 million shares havebeen repurchased during January and February 2008 at an average price of euro 25per share. • CRH remains committed to optimising the use of its balance sheet whilemaintaining an investment grade credit rating. Liam O'Mahony, Chief Executive, said today: "CRH's geographic,sectoral and product balance continued to deliver in 2007 bothin terms of overall trading performance and acquisition activity. Whiledevelopments over recent months have added to economic uncertainties, CRH iswell positioned across its operations to deal with the evolving marketcircumstances. Following record levels of acquisition activity in 2006 and 2007,and with an ongoing strong pipeline of opportunities, we are continuing todevelop our Western European and North American businesses while building on ourgrowing platforms in emerging markets. With a relentless emphasis on operationalefficiency, and targeted cost reduction measures, we remain focused on our twingoals - performance and growth - and on delivering a sixteenth consecutive yearof profit and earnings growth in 2008." Announced Tuesday, 4th March 2008 This Results Announcement 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 statement and other factors discussed in ourAnnual Report on Form 20-F filed with the SEC. Contact CRH at Dublin 404 1000 (+353 1 404 1000) Liam O'Mahony Chief Executive Myles Lee Finance Director Eimear O'Flynn Head of Investor Relations Maeve Carton Group Controller CRH plc, Belgard Castle , Clondalkin, Dublin 22, Ireland TELEPHONE +353.1.4041000 FAX +353.1.4041007 E-MAIL [email protected] WEBSITE www.crh.com Registered Office, 42 Fitzwilliam Square , Dublin 2, Ireland RESULTS HIGHLIGHTS CRH has delivered another very strong performance in 2007 with full year profitbefore tax of euro 1,904 million giving a 19% increase on 2006 (euro 1,602million). This represents CRH's fifteenth consecutive year of profit andearnings growth. The results include the proportionate consolidation of joint ventures in theGroup's income statement, cash flow statement and balance sheet, while theGroup's share of profit after tax of associates is included as a single lineitem in arriving at Group profit before tax. • Sales revenue: euro 20,992 million, up 12% • EBITDA*: euro 2,860 million, up 16% • Operating profit*: euro 2,086 million, up 18% • Profit on disposal of fixed assets: euro 57 million, up 43% • Profit before tax: euro 1,904 million, up 19% • Basic earnings per share: 262.7c, up 17% • Cash earnings per share: 404.9c, up 15% • Dividend per share: 68c, up 31% *EBITDA (earnings before interest, tax, depreciation and amortisation) andoperating profit do not include profit on disposal of fixed assets The average US $/euro rate of 1.3705 for 2007 was 8% weaker versus the euro thanin 2006 (1.2556). This, combined with movements in average rates for the Group'sother operating currencies, had a negative impact of euro 67 million on profitbefore tax. Note 3 on page 15 analyses the key components of 2007 performance. DIVIDEND The Board is recommending a final dividend of 48c per share, an increase of 25%on the 2006 final dividend of 38.5c. This gives a total dividend for the year of68c, an increase of 31%, representing the twenty-fourth consecutive year ofdividend growth. It is proposed to pay the final dividend on 12th May 2008 toshareholders registered at the close of business on 14th March 2008. The 31% 2007 total dividend increase follows a 33% increase in 2006 and reflectsthe second step in a phased reduction in dividend cover which aims to achievedividend cover of the order of 3.5 times for the 2008 financial year. The 2007dividend was covered 3.9 times (2006: 4.3 times and 2005: 4.8 times). DEVELOPMENT Total 2007 acquisition spend amounted to euro 2.2 billion, a new record for CRH.First half highlights included the acquisition of Swiss builders merchant GetazRomang completed in May; the purchase of 50% of Denizli Cement in Turkey; thebuyout of the remaining 50% of Paver Systems in the US; and the acquisition ofHarbin Sanling Cement Company in China. Major second half transactions includedthe August buyout of the remaining 55% of Cementbouw BV in the Netherlands;completion of four separate transactions by Americas Materials announced inSeptember; and the purchase of certain Cemex assets in Florida and Arizona. Inaddition CRH completed 68 other transactions across its various businesssegments. In addition during the year we commenced three major cement projects in Ireland,Poland and Ukraine. These, combined with ongoing construction of our jointventure cement plant in Florida, represent a total investment over three yearsof approximately euro 0.7 billion targeted at modernising and expanding cementproduction in three key European markets and providing CRH's first investment inUS cement. SEGMENT REVIEWEUROPE - MATERIALS Analysis of change Total Acquisitions euro million 2007 2006 Change Organic 2006 2007 ExchangeSales revenue 3,651 2,967 +684 +457 +24 +210 -7% change +23% +15% +1% +7% -Operating profit* 586 421 +165 +125 +6 +34 -% change +39% +30% +1% +8% -Margin 16.1% 14.2% *Operating profit is before profit on disposal of fixed assets Europe Materials delivered a significant increase in operating profit and margindriven by exceptionally strong organic growth from operations in Central/EasternEurope. Ireland: Although the second half saw an accelerating decline in residentialoutput from high levels, the National Development Plan continued to underpininfrastructure demand, while private investment remained strong particularly incommercial and retail projects. Agricultural construction recovered well,supported by environmental improvement grant aid. As a result overall demandfor our products was at a similar level to 2006. Ongoing programmes to reduceoperating costs and improve efficiency delivered further savings, particularlyin the area of energy cost reduction. The emphasis on cost recovery throughprice improvement continued. Operations in Northern Ireland benefited from thestrong local economy. Profits were ahead of 2006. Finland/Baltics: Broad-based strength in Finnish construction activitycontributed to strong advances in cement, aggregates and readymixed concretevolumes. There was a marked increase in new non-residential construction, whichgrew by over 20%, while ongoing investments in infrastructure combined with astable residential market, also underpinned volume growth. All products achievedimproved pricing resulting in a very good uplift in Finnish operatingperformance. Volumes in Estonia, Latvia and St. Petersburg were generally aheadof 2006 and while higher input costs remained a challenge, particularly inRussia, good cost control and better pricing held overall profits in line with2006 levels. Central/Eastern Europe: 2007 was an excellent year for our Polish operationswith annual cement volumes up 17% on 2006. Our concrete businesses performedextremely well with improvement in both volumes and prices across all productgroups. Despite some delays in the road programme our aggregates and blacktopoperations performed well with a significant increase in hardrock aggregatessales. The lime group continued to perform satisfactorily with lime productsvolumes up 7%. Overall, profits in Poland improved significantly on 2006levels. In Ukraine, GDP grew by 8% with increased demand for cement. Highercement pricing in Russia and other neighbouring countries had a positive effecton pricing and profitability progressed significantly to record levels. Switzerland: Construction activity grew by 1.4%. Growth drivers wereinfrastructure and industrial construction. Start-up infrastructure projectsled to higher cement sales and strong construction activity in all the regionalmarkets led to better profitability in downstream ready-mixed concrete,aggregates and asphalt operations. Iberia: Although the Spanish economy continued to grow our volumes in Spainwere a little down on the record levels achieved in 2006. Nevertheless, betterpricing and improved cost control led to higher margins and increasedprofitability. Corporacion Uniland, the Group's 26% Spanish cement associate,recorded a strong increase in profitability. In Portugal, construction declinedby approximately 3.9%, reflecting reduced activity in housing. However, Secil'sthree cement plants operated at full capacity taking advantage of strong exportmarkets and Secil recorded a satisfactory year supported by a good advance inprofitability in its Tunisian cement operation and in its downstream activitiesin Portugal. Eastern Mediterranean: In April CRH acquired a 50% stake in Denizli Cement, oneof three large cement producers in the Aegean region of south-western Turkey .The performance of the business since acquisition has been in line with ourexpectations and ahead of prior year results. In Israel, our 25% associateperformed slightly ahead of 2006. EUROPE - PRODUCTS Analysis of change Total Acquisitions Non-receuro million 2007 2006 Change Organic 2006 2007 items Exchange Sales revenue 3,628 3,186 +442 +161 +196 +85 - -% change +14% +5% +6% +3% - -Operating profit* 308 221 +87 +30 +20 +6 +31 -% change +39% +13% +9% +3% +14% -Margin 8.5% 6.9%Excl. non-recurring 8.5% 7.9% *Operating profit is before profit on disposal of fixed assets These operations delivered a strong improvement in operating profit and a goodmargin advance in 2007. Concrete Products: This group, which in 2007 accounted for approximately 50% ofEurope Products' operating profit, reported a good underlying profit advanceboosted by contributions from acquisitions. Architectural operations (pavers,tiles and blocks) performed ahead of 2006 despite difficult conditions inseveral markets. The Dutch and Belgian businesses continued to face toughcompetition due to market over-capacity and downward price pressure. Operationsin Germany posted strong results despite a downturn in new residentialconstruction while in France results improved driven by operational synergies.Our Danish and Slovakian businesses continued to perform strongly. Supreme inthe UK , acquired in April 2006, contributed above expectations in its firstfull year. Our Structural operations (floor & wall elements, beams, vaults anddrainage products) again delivered excellent results driven by tight operationalcontrol and strong non-residential markets in Belgium, France, Denmark andPoland. Our sand-lime brick business posted lower results reflecting sloweractivity levels in the Dutch residential market. Clay Products: Overall the Clay Products group delivered increased profits in2007. UK brick industry volumes showed a welcome return to growth in the firsthalf of 2007; however, with heavy rain across the UK in mid summer, volumes forthe year were at a similar level to 2006. Ibstock profits advanced strongly dueto operating and overhead efficiencies. In Mainland Europe our markets in theNetherlands slowed as the year progressed and profitability declined. In Germanythe initial optimism of the first quarter was not sustained and our clayoperations were restructured; however, underlying profitability improvedsignificantly on 2006. Polish markets advanced strongly and profits increasedsharply as a result of good volume and price growth. Building Products: The Building Products group is active in light-side buildingmaterials and focuses on three core business areas: Construction Accessories,Building Envelope Products and Insulation. Market conditions in 2007 werepositive, particularly in non-residential sectors in Germany , the Benelux andthe UK. All business units contributed to organic improvement, complemented byacquisitions. Our Construction Accessories business, the market leader inEurope , experienced another year of top performance and growth. The full yearcontribution of Halfen, acquired May 2006, exceeded our expectations and all ourother businesses showed solid operating results. Building Envelope Productscomprises the Fencing & Security (F&S), Daylight & Ventilation (D&V) and RollerShutters & Awnings (RSA) businesses, which specialise in entrance control andclimate control products. All these activities contributed to a stronger 2007performance, while the first full year contribution from our RSA business,acquired August 2006, exceeded expectations. Insulation made further goodprogress in its profit recovery programme. EUROPE - DISTRIBUTION Analysis of change Total Acquisitions Non-receuro million 2007 2006 Change Organic 2006 2007 items Exchange Sales revenue 3,435 2,786 +649 +76 +25 +566 - -18% change +23% +3% +1% +20% - -1%Operating profit* 212 172 +40 +23 +1 +36 -19 -1% change +23% +13% - +21% -11% -Margin 6.2% 6.2%Excl. non-recurring 6.2% 5.5% *Operating profit is before profit on disposal of fixed assets 2007 was another strong year with further improvement in sales and operatingprofit. Good market conditions in most of our markets, a mild winter and arelentless focus on margin improvement and cost control, underpinned organicgrowth. This was supplemented by strong contributions from the 10 acquisitionscompleted in 2007, in particular from Getaz Romang in Switzerland. Builders Merchants: Following a good final quarter in 2006, our Dutch businessperformed very strongly in the first half of 2007 and demand remained solidthroughout the second half. This positive backdrop combined with a targeted "quality for quantity" margin improvement programme enabled our business toreport strong sales and profit growth. In France, our heritage operations in Ile de France (100%-owned), Burgundy (57%)and Franche Comte (57%) benefited from generally good market conditionsresulting in improved sales and profits. LDP (100%), acquired in January 2007with 17 locations in Normandy, delivered very satisfactory results and exceededour initial expectations. Our acquisition (effective 1st May 2007) of Getaz Romang created the largestbuilders merchants business in Switzerland with more than 100 locations andannualised sales of approximately euro 1 billion. Organic improvement in theheritage Baubedarf and Richner operations combined with a performance well aboveinitial expectations from Getaz Romang and the successful integration of allthree businesses, resulted in a highly satisfactory 2007 performance inSwitzerland. Quester, our Austrian builders merchants company, failed to benefit in 2007 fromgenerally good market conditions and from re-organisation measures taken in2006. As a result, sales, operating profit and margins declined. In response,further restructuring initiatives were implemented from mid-year which areexpected to restore margins to appropriate levels. Taking account of theserestructuring costs, this business was loss-making at operating profit level in2007. In Germany, our 48% Bauking joint-venture had a good start to the year due tomild winter weather. However, the expiry of home ownership grants and theincrease in value added tax (VAT) effective 1st January 2007 began to impactfrom the second quarter. As a result, like-for-like sales were lower than in2006. However, with relentless cost control, underlying operating profit wassimilar to 2006 and, with an active year on the development front, overall salesand operating profit advanced. DIY: After some flat years, 2007 saw a healthy increase in the total DIY marketin the Netherlands underpinned by increasing consumer confidence. The mildwinter and sunny spring period resulted in a very successful garden season,while good promotional campaigns and sharp formula management resulted in anincrease in market share. Organic sales and profit advanced strongly.Operations in Belgium also showed a healthy increase in both sales and profit. In a very competitive market, which was depressed by the effects of the VATincrease, Bauking's DIY activities in Germany reported sales and profit in linewith 2006. Despite generally weak economic conditions in Portugal, like-for-like sales inour joint-venture remained at 2006 levels. Start-up costs associated with 7 newstore openings resulted in lower profits than 2006. AMERICAS - MATERIALS Analysis of change Total Acquisitionseuro million 2007 2006 Change Organic 2006 2007 Exchange Sales revenue 5,445 4,778 +667 -61 +1,002 +127 -401% change +14% -1% +21% +2% -8%Operating profit* 570 475 +95 +42 +80 +12 -39% change +20% +9% +17% +2% -8%Margin 10.5% 9.9%Excl. APAC 12.1% 11.2% *Operating profit is before profit on disposal of fixed assets A strong organic performance, with continuing success in recovering higher inputcosts, and a significant incremental contribution from APAC, resulted in anotherrecord year of sales and operating profit. The reported operating margin of10.5% again reflected the dampening effect of APAC's lower margin business mix;however the margin excluding APAC advanced to 12.1%. Despite record crude oil prices, bitumen costs increased by a relatively modest5%. Energy used at our asphalt plants had a composite cost decrease of 7%. Thecost of diesel and gasoline used to power our mobile fleet rose by 6%. Againstthis backdrop, overall prices increased 7% for aggregates, 8% for readymixedconcrete and 12% for asphalt. While funding for highway projects showed furthergrowth, with relatively fixed highway budgets, volumes were again impacted bythe strong price increases necessary to recover higher input costs. Totalvolumes, including acquisitions, increased 5% for aggregates, 2% for readymixedconcrete and 14% for asphalt. Heritage volumes declined 7% for aggregates, 13%for readymixed concrete, and 13% for asphalt. The acquisition of APAC has resulted in changes to our regional structure. Thenewly formed Mid-Atlantic region comprises operations in Pennsylvania , Delawareand Michigan , previously part of the Central region. We have merged APAC'soperations in western N. Carolina, eastern Tennessee and Virginia into aredefined Central region together with heritage operations in Ohio, Kentucky, W.Virginia, N. Carolina and Virginia. A new APAC region comprises operations inAlabama, Arkansas, Florida, Georgia, Kansas, Missouri, Mississippi, S. Carolina,Texas, Oklahoma and W. Virginia. New England: New Hampshire and Vermont enjoyed good trading in solid markets.Massachusetts had another favorable year with good demand and a continuingpositive pricing environment. The states of Maine and Connecticut both reducedhighway spending and higher prices impacted volumes at the municipal and locallevel resulting in profit declines. New York/New Jersey: Our New York/New Jersey businesses had record resultsmainly due to asphalt margin expansion. In Upstate New York, our Albanyoperations once again increased profit. Recent years have seen significantcontraction in the Rochester region, however, 2007 brought some improvement indemand and our operations reported higher profit. Mid Atlantic: Despite continued poor markets in Michigan and a slowing economyin Pennsylvania and Delaware, our operations delivered results on a par with2006 reflecting strong cost control and benefits from price initiatives. Central: This region delivered record results with improvements in pricing, awinter-fill programme which mitigated significant bitumen cost increases duringthe busy paving season and positive contributions from APAC operations. West: Another excellent year with solid non-residential and highway marketsoffsetting weak residential demand. Once again, Utah and Idaho saw significantprofit gains. In Washington, results improved significantly. Operations inWyoming, Montana, South Dakota, Colorado, and New Mexico had another recordyear. However, Iowa suffered profit declines due to weak residential demand. APAC: We achieved significant synergies through overhead reductions and byshifting the business emphasis from construction to materials. The integrationprogramme was completed on schedule and overall performance was well ahead ofexpectations. AMERICAS - PRODUCTS Analysis of change Total Acquisitionseuro million 2007 2006 Change Organic 2006 2007 ExchangeSales revenue 3,510 3,572 -62 -186 +226 +185 -287% change -2% -5% +6% +5% -8%Operating profit* 340 375 -35 -17 -1 +13 -30% change -9% -4% - +3% -8%Margin 9.7% 10.5%Excl. MMI 11.0% 11.3%*Operating profit is before profit on disposal of fixed assets Our Products businesses in the Americas delivered a resilient performance withcontinued growth in non-residential activity mitigating the impact ofresidential weakness leaving full year operating profit before translationeffects only slightly below the record 2006 outcome. Architectural Products Group (APG): APG faced difficult trading conditions in2007 due to the sharp and continuing slowdown in the residential constructionsector and weaker demand from the homecenter channel. These negative influenceswere partially offset by strong non-residential construction which limited thedecline in like-for-like sales to approximately 10%. Despite the reduction inturnover, strong margin management, a significant turnaround in our Lawn &Garden bagged soil and mulch activities and a strong performance from ourCanadian operations resulted in broadly maintained profits and an improvedoverall operating margin compared with 2006. Precast: The continued strength of the non-residential construction sectorduring the year was offset by a very weak residential sector. However, marginswere sustained by good cost control and effective price management and profitswere only slightly behind a record 2006. Backlog volumes and margins headinginto 2008 are similar to 2007. Glass: Trading conditions in the architectural glass market weakened in thesecond half of the year, although continued demand for high-performanceenergy-efficient architectural glass products and value-added fabricationservices resulted in similar like-for-like sales and operating profit. This,combined with an excellent first-time contribution from Vistawall, a leadingvertically-integrated manufacturer of a broad range of architectural aluminiumglazing systems with annual sales of US$323 million and which was acquired inJune 2007, enabled the group to achieve a record performance in 2007. MMI: Acquired at end-April 2006, MMI is a leading manufacturer and distributorin three segments: fencing products, welded wire reinforcement products andconstruction accessories. Sales and profitability in MMI's fencing divisiondeclined significantly due to the dramatic fall in residential constructionactivity; this also affected certain product categories in the welded wirereinforcement division. Construction accessories performed relatively well forthe year. Strong management actions are underway to rationalise MMI's coststructure and improve operating profit margins. South America: Our operations in Argentina and Chile had another record year ina robust regional economic environment. In Argentina, the recent capacityexpansion made in our ceramic tile business resulted in further strong gains insales and profits. Our Chilean glass business performed extremely well. AMERICAS - DISTRIBUTION Analysis of change Total Acquisitionseuro million 2007 2006 Change Organic 2006 2007 ExchangeSales revenue 1,323 1,448 -125 -209 +163 +42 -121% change -9% -15% +11% +3% -8%Operating profit* 70 103 -33 -39 +15 - -9% change -32% -38% +14% - -8%Margin 5.3% 7.1% *Operating profit is before profit on disposal of fixed assets Americas Distribution comprises two divisions which supply specialist contractorgroups; Roofing/Siding which accounts for approximately 53% of annualised salesand Interior Products (wallboard, steel studs and acoustical ceiling systems)which represents approximately 47% of annualised sales. Roofing/Siding: Demand declined in almost all areas reflecting the downturn inboth new and remodel activity. Florida was particularly impacted due to theabsence of extensive 2006 roofing/siding repair activity which followed activehurricane seasons in both 2004 and 2005. Hawaii and the Pacific Northwest werethe bright spots for the year. Interior Products: This business performed well despite a generally weakeningbackground and significant price deflation in gypsum wallboard and, with thebenefits of good contributions from acquisition activity in recent yearsparticularly in Hawaii , Texas and North Carolina , profits were maintained. Against this backdrop, full year operating profit for Americas Distributiondeclined by 26% before translation effects; while down from the record 2006level, the operating profit margin of 5.3% was resilient in the circumstances. FINANCE Although higher short-term interest rates and substantial acquisition activityover the past two years resulted in a significant increase in net finance coststo euro 303 million (2006: euro 252 million), EBITDA/net interest cover for theyear remained very comfortable at 9.4 times (2006: 9.7 times). The tax chargeat 24.5% increased compared with 2006 (23.6%). Net debt increased by euro 671 million despite a total net spend of euro 3.25billion on acquisitions, investments and capital projects, partly helped by aeuro 237 million favourable translation impact mainly attributable to the weakeryear-end rate for the US Dollar. Net debt at year-end amounted to euro 5,163million (2006: euro 4,492 million). Total equity increased by euro 916 million after taking account of an adverseeuro translation impact of euro 410 million due to the effect of the weaker USDollar. Total equity at year-end amounted to euro 8,020 million (2006: euro7,104 million). Subsequent to year-end, on 3rd January 2008, CRH announced that with a strongfinancial position the Board had decided to introduce a share repurchaseprogramme limited to a maximum of 5% of the 547 million Ordinary Shares then inissue. Since then approximately 6 million Ordinary Shares, representing justover 1% of CRH's issued share capital, have been repurchased at an average priceof euro 25 and are now held as Treasury Shares. DEVELOPMENT Total acquisition spend in 2007 amounted to euro 2.2 billion, a record for theGroup. Europe Materials expanded its presence in emerging markets with the acquisitionin February of a modern 650,000 tonne cement plant in Heilongjiang province innortheast China and in April of a 50% stake in Denizli Cement, which operates anintegrated cement and ready mixed concrete business with a modern 1.8 milliontonne cement plant in the Aegean region of southwestern Turkey. In August, CRHacquired the remaining 55% of Cementbouw BV , a major Dutch trader in cement,fly-ash and aggregates, and a leading readymixed concrete producer in theNetherlands , following which Cementbouw became a new reporting and developmentplatform within Europe Materials. These transactions, combined with eleven otherbolt-on acquisitions/investments across the platform, involved a totalinvestment of euro 354 million. In addition, during 2007, Europe Materialscommenced three major cement projects in Ireland, Poland and Ukraine targeted atmodernising and expanding cement production capacity in three key markets. Europe Products continued its strong development thrust with a total investmentof euro 221 million on 16 acquisitions. The Concrete group was again very activeaccounting for the bulk of the spend, with entry into the Romanian market, threeother architectural acquisitions including an add-on in the UK and two bolt-onsto its water treatment and paving business in Belgium. The structural groupexpanded its product range and market position in Denmark with the acquisitionof a concrete stairs business in March followed by the purchase of a lightweightwall panels and flooring manufacturer in August; this group also acquired asmall add-on in France and completed the buyout of the remaining 75% of ErgonPoland. The Clay group expanded its Polish presence with the acquisition of aclay brick, block and roof tile manufacturer south of Poznan . Four bolt-ons toour Construction Accessories platform were completed in the UK, France, Italyand Norway while our Fencing & Security business completed three small deals inthe UK, France and Sweden. Europe Distribution completed 10 acquisitions in 2007 for a total considerationof euro 442 million. The major transaction was the acquisition in May of thepublicly-quoted Swiss builders merchant Getaz Romang. This business which hasextensive operations in the French-speaking region of Switzerland is anexcellent complementary fit with CRH's existing operations in German-speakingSwitzerland. Other significant Distribution acquisitions were the purchase inJanuary of a 17-branch builders merchanting business in Normandy and theFebruary acquisition by our German joint-venture Bauking of a leading regionalplayer with 16 builders merchants locations and 13 DIY stores in southernNorth-Rhine-Westphalia. With a total investment of euro 642 million (US$0.9 billion), 2007 was anothervery busy development year for Americas Materials. The major elements were theacquisition of Conrad Yelvington Distributors (CYDI) and the purchase of certainCemex assets in Florida and Arizona. CYDI is the largest rail distributor ofaggregates in the Southeast US and, with a major presence in Florida, is anexcellent fit with APAC's Florida activities and with our extensive Precast andArchitectural Products businesses in the region. The former Cemex assets fitwell with our interests in Florida and offer opportunities in Arizona. Inaddition the Division completed 17 other transactions including significantmoves in the Western states and Pennsylvania, and the start of a bolt-onprogramme across the APAC platform. Construction of the 1.1 million-tonnejoint-venture greenfield cement plant in Florida is progressing well withcompletion scheduled for end-2008. Americas Products spent a total of euro 355 million on acquisitions during 2007.APG completed 12 acquisitions which included the purchase of concrete blockoperations, masonry distribution businesses and other bolt-on acquisitions inmasonry, packaged soils and mulches, and packaged specialty concrete products.APG also exercised its option to buy out the remaining 50% stake in PaverSystems, a leading manufacturer of interlocking concrete pavers in Florida. ThePrecast Group completed two transactions acquiring a polymer box manufacturerwith plants in California, Kentucky and Ohio and a concrete manhole producer inSouthern California. In June, the Glass Group acquired Vistawall, a leadingvertically-integrated manufacturer of architectural aluminium glazing systemswith 26 locations and sales in all 50 states. Americas Distribution invested euro 213 million in four transactions during theyear. The largest of these was the purchase in November of Acoustical MaterialsServices (AMS) a major independent interior products distributor with 21locations in California, Nevada, Hawaii, Arizona and Baja California, Mexico .Two single-branch acquisitions in April expanded our roofing and siding presencein California, while September saw the purchase of a six-branch business inFlorida. OUTLOOK Europe: The outlook for Europe Materials in 2008 is good. While organic growthis unlikely to be as strong as an outstanding 2007, due to expected declinesfrom high levels in Irish and Spanish construction, we expect that strong growthin Poland and Ukraine and continuing satisfactory activity levels in Nordic andSwiss markets will enable further good progress in 2008. Following successful delivery by our Products and Distribution activities in themain Eurozone economies over the past two years, ongoing margin improvementthrough a combination of price recovery and cost reduction remains the key focusand we look to further profit advances in 2008, despite a somewhat slower growthbackdrop. Overall for Europe, organic growth remains well underpinned by a continuingstrong dynamic in central and eastern countries with moderate progress expectedin the broader Eurozone. These operations will further benefit in 2008 from theeuro 1 billion of acquisition activity undertaken in 2007. Americas: US highway funding will increase further in 2008 and, with acontinuing favourable pricing environment, a sustained emphasis on operatingefficiency and benefits from a record 2006/07 development spend, we expectanother year of progress for our infrastructure-focussed Materials operations. New US residential demand is forecast to decline further, residential RMIactivity is expected to remain close to 2007 levels and, following good momentumin 2007, non-residential construction looks likely to moderate later in 2008.Benefits from acquisitions, improvements made in 2007, and further targeted costreduction measures will mitigate the effects of an overall weaker market, and welook to a slightly lower US$ outcome for our Products and Distributionactivities. Although movements in the US dollar will have a translation impact, with ourbalanced exposure and expected returns from the euro 1.2 billion of acquisitionscompleted in 2007, we currently expect an increase in US$ operating profit fromour American operations in 2008. Overall: While developments over recent months have added to economicuncertainties, CRH is well positioned across its operations to deal with theevolving market circumstances. Following record levels of acquisition activityin 2006 and 2007, and with an ongoing strong pipeline of opportunities, we arecontinuing to develop our Western European and North American businesses whilebuilding on our growing platforms in emerging markets. With a relentlessemphasis on operational efficiency, and targeted cost reduction measures, weremain focused on our twin goals - performance and growth - and on delivering asixteenth consecutive year of profit and earnings growth in 2008. GROUP INCOME STATEMENTFor the year ended 31st December 2007 2007 2006 euro m euro m Revenue 20,992 18,737Cost of sales (14,715) (13,123)Gross profit 6,277 5,614Operating costs (4,191) (3,847)Group operating profit 2,086 1,767Profit on disposal of fixed assets 57 40Profit before finance costs 2,143 1,807Finance costs (473) (407)Finance revenue 170 155Group share of associates' profit after tax 64 47Profit before tax 1,904 1,602Income tax expense (466) (378)Group profit for the financial year 1,438 1,224 Profit attributable to:Equity holders of the Company 1,430 1,210Minority interest 8 14Group profit for the financial year 1,438 1,224 Earnings per Ordinary ShareBasic 262.7c 224.3cDiluted 260.4c 222.4c Cash earnings per Ordinary Share 404.9c 352.1c GROUP BALANCE SHEETAs at 31st December 2007 2007 2006ASSETS euro m euro m Non-current assetsProperty, plant and equipment 8,226 7,480Intangible assets 3,692 2,966Investments in associates 574 554Other financial assets 78 97Derivative financial instruments 124 74Deferred income tax assets 336 489Total non-current assets 13,030 11,660Current assetsInventories 2,226 2,036Trade and other receivables 3,199 3,172Derivative financial instruments 9 5Liquid investments 318 370Cash and cash equivalents 1,006 1,102Total current assets 6,758 6,685Total assets 19,788 18,345EQUITYCapital and reserves attributable to the Company's equity holdersEquity share capital 186 184Preference share capital 1 1Share premium account 2,420 2,318Own shares (19) (14)Other reserves 70 52Foreign currency translation reserve (547) (137)Retained income 5,843 4,659 7,954 7,063Minority interest 66 41Total equity 8,020 7,104LIABILITIESNon-current liabilitiesInterest-bearing loans and borrowings 5,928 5,313Derivative financial instruments 52 47Deferred income tax liabilities 1,312 1,301Trade and other payables 141 160Retirement benefit obligations 95 262Provisions for liabilities 248 320Capital grants 11 10Total non-current liabilities 7,787 7,413Current liabilitiesTrade and other payables 2,956 2,788Current income tax liabilities 244 216Interest-bearing loans and borrowings 570 645Derivative financial instruments 70 38Provisions for liabilities 141 141Total current liabilities 3,981 3,828Total liabilities 11,768 11,241Total equity and liabilities 19,788 18,345 GROUP CASH FLOW STATEMENT For the year ended 31st December 2007 2007 2006Cash flows from operating activities euro m euro mProfit before tax 1,904 1,602Finance costs, net 303 252Group share of associates' profit after tax (64) (47)Profit on disposal of fixed assets (57) (40)Group operating profit 2,086 1,767Depreciation charge 739 664Share-based payments 23 16Amortisation of intangible assets 35 25Amortisation of capital grants (3) (2)Other non-cash movements (2) 10Net movement on provisions (49) 11Decrease/(increase) in working capital 261 (132)Cash generated from operations 3,090 2,359Interest paid (including finance leases) (352) (253)Income taxes paid: - Irish corporation tax (18) (20) - Overseas corporation tax (370) (358)Net cash inflow from operating activities 2,350 1,728Cash flows from investing activitiesInflowsProceeds from disposal of fixed assets 156 252Interest received 64 46Capital grants received 3 -Dividends received from associates 30 22 253 320OutflowsPurchase of property, plant and equipment (1,028) (832)Acquisition of subsidiaries and joint ventures (1,858) (1,978)Investments in and advances to associates - (7)Advances to joint ventures and purchase of trade investments (40) (13)Deferred and contingent acquisition consideration paid (107) (74) (3,033) (2,904)Net cash outflow from investing activities (2,780) (2,584)Cash flows from financing activitiesInflowsProceeds from issue of shares 36 87Shares issued to minority interests - 3Decrease in liquid investments 29 -Increase in interest-bearing loans and borrowings 1,481 1,708Increase in finance lease liabilities 2 3 1,548 1,801OutflowsOrdinary Shares purchased (own shares), net (31) (15)Iincrease in liquid investments - (35)Repayment of interest-bearing loans and borrowings (753) (656)Repayment of finance lease liabilities (27) (13)Net cash movement in derivative financial instruments (113) (29)Dividends paid to equity holders of the Company (250) (197)Dividends paid to minority interests (5) (12) (1,179) (957)Net cash inflow from financing activities 369 844Decrease in cash and cash equivalents (61) (12)Cash and cash equivalents at beginning of year 1,102 1,149Translation adjustment (35) (35)Cash and cash equivalents at end of year 1,006 1,102 GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE For the year ended 31st December 2007 2007 2006 euro m euro mItems of income and expense recognised directly within equity:Currency translation effects (410) (371)Actuarial gain on Group defined benefit pension obligations 159 155Gains/(losses) relating to cash flow hedges 8 (2)Tax on items recognised directly within equity (74) (15)Net expense recognised directly within equity (317) (233)Group profit for the financial year 1,438 1,224Total recognised income and expense for the year 1,121 991 Equity holders of the company 1,116 980Minority interest 5 11Total recognised income and expense for the year 1,121 991 GROUP STATEMENT OF CHANGES IN EQUITY For the year ended 31st December 2007 2007 2006 euro m euro m Total equity at beginning of year 7,104 6,234Issue of shares: - Share option and participation schemes 36 87 - Issued in lieu of dividends 68 25Ordinary Shares purchased (own shares), net (31) (15)Share-based payments 23 16Dividends (318) (222)Movement in minority interest 25 2Items of income/(expense) recognised directly within equity:Currency translation effects (410) (371)Actuarial gain on Group defined benefit pension obligations 159 155Gains/(losses) relating to cash flow hedges 8 (2)Tax on items recognised directly within equity (74) (15)Profit for the year attributable to equity holders 1,430 1,210Total equity at end of year 8,020 7,104 SUPPLEMENTARY INFORMATION 1 Basis of Preparation The financial information presented in this report has been prepared inaccordance with the Group's accounting policies under International FinancialReporting Standards as issued by the International Accounting Standards Board(IASB) 2 Translation of Foreign Currencies This financial information is presented in euro. Results and cash flows ofsubsidiaries, joint ventures and associates based in non-euro countries havebeen translated into euro at average exchange rates for the period, and therelated balance sheets have been translated at the rates of exchange ruling atthe balance sheet date. Adjustments arising on translation of the results ofnon-euro subsidiaries, joint ventures and associates at average rates, and onrestatement of the opening net assets at closing rates, are dealt with in aseparate translation reserve within equity, net of differences on relatedcurrency borrowings. All other translation differences are taken to the incomestatement. Rates used for translation of results and balance sheets into eurowere as follows: Average Year ended 31st Decembereuro 1 = 2007 2006 2007 2006US Dollar 1.3705 1.2556 1.4721 1.3170Pound Sterling 0.6843 0.6817 0.7334 0.6715Polish Zloty 3.7837 3.8959 3.5935 3.8310Ukrainian Hryvnia 6.8982 6.3290 7.3588 6.6583Swiss Franc 1.6427 1.5729 1.6547 1.6069Canadian Dollar 1.4678 1.4237 1.4449 1.5281Argentine Peso 4.2718 3.8623 4.5948 4.0373Israeli Shekel 5.6270 5.5928 5.6201 5.5623 3 Key Components of 2007 Performance Analysis of Change Total Acquisitionseuro million 2007 2006 Change Organic 2006 2007 Non-rec ExchangeRevenue 20,992 18,737 +2,255 +238 +1,636 +1,215 - -834Operating profit 2,086 1,767 +319 +164 +121 +101 +12 -79Profit on disposals 57 40 +17 +18 - - -1Trading Profit 2,143 1,807 +336 +182 +121 +101 +12 -80Finance costs, net -303 -252 -51 +42 -64 -42 - +13Associates 64 47 +17 +16 +1 - - -Profit before tax 1,904 1,602 +302 +240 +58 +59 +12 -67PBT % change v. 2006 +19% +15% +4% +4% +1% -5% 4 Analysis of Revenue, EBITDA and Operating Profit by Business 2007 2006 euro m % euro m %RevenueEurope Materials 3,651 17.4 2,967 15.8Europe Products 3,628 17.3 3,186 17.0Europe Distribution 3,435 16.4 2,786 14.9Americas Materials 5,445 25.9 4,778 25.5Americas Products 3,510 16.7 3,572 19.1Americas Distribution 1,323 6.3 1,448 7.7 20,992 100.0 18,737 100.0EBITDA *Europe Materials 746 26.1 564 23.0Europe Products ** 461 16.1 361 14.7Europe Distribution ** 261 9.1 210 8.5Americas Materials 834 29.2 695 28.3Americas Products 468 16.4 506 20.6Americas Distribution 90 3.1 120 4.9 2,860 100.0 2,456 100.0Depreciation chargeEurope Materials 159 143Europe Products 145 134Europe Distribution 46 37Americas Materials 263 220Americas Products 112 116Americas Distribution 14 14 739 664Amortisation of intangible assetsEurope Materials 1 -Europe Products 8 6Europe Distribution 3 1Americas Materials 1 -Americas Products 16 15Americas Distribution 6 3 35 25Operating profitEurope Materials 586 28.1 421 23.8Europe Products ** 308 14.8 221 12.5Europe Distribution ** 212 10.2 172 9.7Americas Materials 570 27.3 475 26.9Americas Products 340 16.3 375 21.2Americas Distribution 70 3.3 103 5.9 2,086 100.0 1,767 100.0Profit on disposal of fixed assetsEurope Materials 29 28Europe Products 11 2Europe Distribution 3 4Americas Materials 11 2Americas Products 2 3Americas Distribution 1 1 57 40 *EBITDA excludes profit on disposal of fixed assets and comprises groupoperating profit (earnings) before interest, tax, depreciation and amortisation. ** 2006 segment results for Europe Products included a goodwill impairmentloss of euro 50 million relating to the Cementbouw BV joint venture in theNetherlands, and euro 19 millon of a total gain of euro 38 million arising ondeconsolidation of certain pension schemes in the Netherlands. The remainingeuro 18 million of the gain was included in the segment profit for EuropeDistribution. 5 Geographical Analysis of Revenue and Operating Profit 2007 2006 euro m % euro m %RevenueIreland * 1,402 6.7 1,251 6.7Benelux 2,918 13.9 2,628 14.0Rest of Europe 6,382 30.4 5,058 27.0Americas 10,290 49.0 9,800 52.3 20,992 100.0 18,737 100.0EBITDA**Ireland * 207 7.2 209 8.5Benelux *** 354 12.4 301 12.3Rest of Europe 905 31.6 624 25.4Americas 1,394 48.8 1,322 53.8 2,860 100.0 2,456 100.0Depreciation chargeIreland * 48 52Benelux 82 81Rest of Europe 220 181Americas 389 350 739 664Amortisation of intangible assetsIreland * - -Benelux 2 2Rest of Europe 10 5Americas 23 18 35 25Operating profitIreland * 159 7.6 157 8.9Benelux *** 270 12.9 218 12.3Rest of Europe 675 32.4 438 24.8Americas 982 47.1 954 54.0 2,086 100.0 1,767 100.0Profit on disposal of fixed assetsIreland * 26 23Benelux 7 3Rest of Europe 9 8Americas 15 6 57 40 \* Total island of Ireland **EBITDA excludes profit on disposal of fixed assets and comprises groupoperating profit (earnings) before interest, tax, depreciation and amortisation. ***2006 segment results for Benelux included a goodwill impairment loss of euro50 million relating to the Cementbouw BV joint venture in the Netherlands , anda gain of euro 38 million arising on deconsolidation of certain pension schemesin the Netherlands . 6 Proportionate Consolidation of Joint Ventures 2007 2006Group share of: euro m euro mRevenue 1,076 901Cost of sales (734) (628)Gross profit 342 273Operating costs (229) (180)Impairment of Cementbouw bv goodwill - (50)Operating profit 113 43Profit on disposal of fixed assets - 4Profit before finance costs 113 47Finance costs (net) (14) (16)Profit before tax 99 31Income tax expense (25) (18)Group profit for the financial year 74 13 Depreciation 43 37 7 Earnings per Ordinary Share The computation of basic, diluted and cash earnings per share is set out below: 2007 2006 euro m euro mProfit attributable to equity holders of the Company 1,430 1,210Preference dividends paid - -Numerator for basic and diluted earnings per Ordinary Share 1,430 1,210Amortisation of intangibles 35 25Depreciation charge 739 664Numerator for cash earnings per Ordinary Share 2,204 1,899 Number of Number ofDenominator for basic earnings per Ordinary Share Shares SharesWeighted average number of shares (millions) in issue 544.3 539.4Effect of dilutive potential shares (share options) 4.8 4.7Denominator for diluted earnings per Ordinary Share 549.1 544.1 Earnings per Ordinary Share euro cent euro cent - basic 262.7 224.3 - diluted 260.4 222.4Cash earnings per Ordinary Share (i) 404.9 352.1 (i) Cash earnings per share, a non-GAAP financial measure, is presented herefor information as management believes it is a useful financial indicator of acompany's ability to generate cash from operations. 8 Net Debt and Finance Costs 2007 2006Net debt euro m euro mNon-current assetsDerivative financial instruments 124 74Current assetsDerivative financial instruments 9 5Liquid investments 318 370Cash and cash equivalents 1,006 1,102Non-current liabilitiesInterest-bearing loans and borrowings (5,928) (5,313)Derivative financial instruments (52) (47)Current liabilitiesInterest-bearing loans and borrowings (570) (645)Derivative financial instruments (70) (38)Total net debt (5,163) (4,492)Including Group share of joint ventures' net debt (164) (248) Finance costs (net)Net Group finance costs on interest-bearing cash and cashequivalents, loans and borrowings 292 234Net pensions financing credit (15) (12)Charge to unwind discount on provisions/deferred consideration 22 27Net charge re change in fair value of derivatives 4 3Total net finance costs 303 252Including Group share of joint ventures' net finance costs 14 16 9 Summarised Cash Flow The table below summarises the Group's cash flows for the years ended 31stDecember 2007 and 31st December 2006. 2007 2006Inflows euro m euro mProfit before tax 1,904 1,602Depreciation 739 664Working capital movements 227 (76)Amortisation of intangibles 35 25Proceeds from disposal of fixed assets 156 252Share issues 104 112 3,165 2,579OutflowsCapital expenditure 1,028 832Acquisitions and investments 2,227 2,311Dividends 318 222Ordinary Shares purchased (own shares), net 31 15Tax paid 388 378Other 81 51 4,073 3,809Net outflow (908) (1,230)Translation adjustment 237 187Increase in net debt (671) (1,043) 10 Other 2007 2006 EBITDA interest cover (times) 9.4 9.7EBIT interest cover (times) 6.9 7.0EBITDA = earnings before interest, tax, depreciation and amortisation, excluding profits on disposal EBIT = earnings before interest and tax, excluding profits on disposalAverage shares in issue 544.3m 539.4mNet dividend per share (euro cent) 68c 52cDividend cover (Earnings per share/Dividend per share) 3.9x 4.3xDepreciation charge - subsidiaries (euro m) 696 627Depreciation charge - share of joint ventures (euro m) 43 37Amortisation of intangibles - subsidiaries (euro m) 35 25Amortisation of intangibles - share of joint ventures (euro m) - -Share-based payment expense (euro m) 23 16Income tax expense - Irish tax (euro m) 13 18Income tax expense - overseas tax (euro m) 413 310Income tax expense - deferred tax (euro m) 40 50Market capitalisation at year-end (euro m) 13,051 17,120Total equity at year-end (euro m) 8,020 7,104Net debt (euro m) 5,163 4,492Net debt as a percentage of total equity 64% 63%Net debt as a percentage of market capitalisation 40% 26% 11 Statutory Accounts The financial information presented in this report does not represent fullstatutory accounts. Full statutory accounts for the year ended 31st December2007 prepared in accordance with IFRS, upon which the Auditors have given anunqualified audit report, have not yet been filed with the Registrar ofCompanies. Full accounts for the year ended 31st December 2006, prepared inaccordance with IFRS and containing an unqualified audit report, have beendelivered to the Registrar of Companies. 12 Board Approval This results announcement was approved by the Board of Directors of CRH plc on3rd March 2008. 13 Annual Report post-out and Annual General Meeting (AGM) The 2007 Annual Report is expected to be posted to shareholders on Wednesday,2nd April 2008 together with details of the Scrip Dividend Offer in respect ofthe final 2007 dividend. The 2007 Annual Report will be available to the publicfrom Thursday 3rd April 2008 at the Company's registered office. The Company'sAGM is scheduled to be held in the Royal Marine Hotel, Dun Laoghaire, Dublin at11 am on Wednesday, 7th May 2008. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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