1st Mar 2005 07:00
CRH PLC01 March 2005 CRH plc 2004 RESULTS Year ended 31st December 2004 % change in 2004 2004 2003 Reported In constant currency euro m euro m Sales 12,820 11,080 +16% +22% Operating profit 1,247 1,045 +19% +25% Profit before tax 1,017 864 +18% +23% euro cent euro cent Earnings per share - excluding goodwill 163.1 136.2 +20% +26% Earnings per share - including goodwill 143.9 121.9 +18% +24% Cash earnings per share 256.4 223.4 +15% +21% Dividend per share 33.0 28.1 +17% +17% Operating profit Including share of joint ventures and associates but excludinggoodwill amortisation and profit on sale of fixed assets. The constant currency percentages compare 2004 results with 2003 figuresrestated at average 2004 exchange rates. A landmark year with profit before tax exceeding euro 1 billion for the firsttime, reflecting excellent full year organic growth and a significantincremental contribution from acquisitions. Although product prices in Ireland failed to compensate for cost increases,volumes showed satisfactory improvements to leave operating profit of euro 129million marginally below last year's level. In Britain and Northern Ireland, underlying organic improvements combined with aslight strengthening of Sterling resulted in a 12% operating profit advance toeuro 64 million. In Mainland Europe, more normal weather conditions and underlying sectoralgrowth in many of our Materials Division's markets resulted in a 46% increase inits operating profit to euro 194 million. The Products & Distribution Divisioncontinued to experience subdued markets. However, despite higher input costs,underlying performance improved and incremental benefits from 2003 and 2004acquisitions resulted in a 62% advance in operating profit to euro 269 million. While escalating energy costs eroded the benefits of price improvements for theAmericas Materials Division, a sustained focus on operating cost reductionhelped deliver a modest improvement in underlying US dollar operating profit.The Americas Products & Distribution Division had a strong year with continuinggood residential demand and ongoing evidence of recovery in the non-residentialsector leading to a 31% increase in US dollar operating profit. Overall resultsfor the Americas Divisions were 16% ahead in US dollar terms; however the weakerUS dollar resulted in a 6% increase in reported operating profit to euro 591million. Reflecting the better trading conditions, the 2004 dividend has been increasedby 17.4%; this is the 21st consecutive year of dividend increase. Total development activity amounted to euro 1 billion, lower than the euro 1.6billion of 2003 which included the euro 0.7 billion Cementbouw transaction, butbroadly in line with the levels of development spend in both 2002 and 2001. Liam O'Mahony, Chief Executive, said today: "2004 was a landmark year for CRH with profit before tax up 18%, exceeding onebillion euro for the first time; our twelfth consecutive year of profit growthand testimony to the Group's strategy and performance. Two particular challengesin the year were the very rapid and severe escalation of energy prices in thethird quarter from already high levels which negatively affected our costs; andthe continued decline of the US dollar. While there is continuing volatility inenergy and currency markets which could impact adversely on economies as theyear progresses, the current 2005 outlook for our markets is on the wholepositive. Against this background, we maintain our relentless emphasis onperformance and the recovery of higher input costs and with our sustained focuson development, supported by our strong balance sheet and cash flow, we look tocontinuing progress in the year ahead." Announced Tuesday, 1st March 2005 * * * * * * RESULTS Highlights 2004 was a landmark year for CRH, with profit before tax exceeding one billioneuro for the first time. The results highlights are set out below. Sales: euro 12,820 million, up 16% (up 22% in constant currency terms) Operating profit*: euro 1,247 million, up 19% (up 25% in constant currencyterms) Profit before tax: euro 1,017 million, up 18% (up 23% in constant currencyterms) Earnings per share excluding goodwill amortisation: 163.1c, up 20% (up 26% inconstant currency terms) Cash earnings per share: 256.4c, up 15% (up 21% in constant currency terms) Dividend per share: 33.0c, up 17% Operating profit includes share of joint ventures and associates but is beforegoodwill amortisation and profit on sale of fixed assets. Growth in the US economy improved during the year, but European economies, withsome exceptions, remained relatively sluggish. More normal weather patterns,particularly in northern Europe which experienced a severe winter and spring in2003, led to strong first half profit growth; despite 2003's subsequent catch-upleading to tough comparatives we continued to show profit growth in the secondhalf of 2004. Two particular challenges in the year were the very rapid andsevere escalation of energy prices in the third quarter from already high levelswhich negatively affected our costs; and the continued decline of the US dollar,fuelled by deficit concerns. While the latter was purely a translation impact,and does not affect the inherent position of our US businesses, it reducedreported profit before tax by over euro 40 million. Overall the Group performed strongly in 2004 with excellent full year organicgrowth and a significant incremental contribution from acquisitions. Dividends The Board is recommending a final dividend of 23.4c per share, an increase of17.6% on the 2003 final dividend of 19.9c. This gives a total dividend for theyear of 33.0c, an increase of 17.4% reflecting the better trading conditions. Itis proposed to pay the final dividend on 9th May 2005 to shareholders registeredat close of business on 11th March 2005. A scrip dividend alternative is beingoffered to shareholders. Finance Incremental costs of financing substantial 2003 and 2004 acquisition activitywere only partly offset by the interest income generated on our strong free cashflow resulting in an increase in total net interest cost to euro 140 million(2003: euro 118 million). The reduction in the effective tax rate to 24.3% (2003: 25.2%) primarilyreflects the lower proportion of US profits. Net debt increased by just euro 133 million despite a total spend of euro 1.4billion on acquisitions, investments and capital projects, reflecting theGroup's strong cash generation characteristics. The weaker dollar had a negativetranslation impact of euro 200 million on shareholders' funds. Development The Europe Materials Division had a busy year with a total development spend ofapproximately euro 0.48 billion. The largest deal was the acquisition in June ofa 49% stake, with joint management control, in Secil, a major verticallyintegrated manufacturer of cement, aggregates and readymixed concrete inPortugal with operations in Tunisia and Lebanon. In January, the Division addedsignificantly to its positions in Switzerland and Finland through theacquisition of Hastag Holding, the second-largest producer of aggregates andreadymixed concrete in Switzerland with market leadership in the cantons ofZurich and St. Gallen, and Abetoni, a manufacturer of concrete pipes, piling andpaving products in southwestern Finland. Three other small add-on deals werecompleted during the year. After an exceptionally busy 2003, the Europe Products & Distribution Divisionhad a quieter, though still active, 2004 with a total development spend ofapproximately euro 0.19 billion. The Concrete Products group completed threedeals, the most significant of which was the purchase in June of Ergon, aBelgian-headquartered manufacturer of precast concrete products with operationsin Belgium, France and Poland. The other Concrete deals were the Octoberpurchase of the remaining 50% interest in Kellen Concrete Products, a high-endDutch paving producer, and the December acquisition of Klaps, a manufacturer ofconcrete paving, sewerage and water treatment products with five productionlocations in northern Belgium. The Clay Products, Insulation, Fencing &Security, Daylight & Ventilation and Construction Accessories groups eachcompleted a bolt-on deal in 2004. The Distribution Group added to its expandingBelgian DIY network with the purchase of three stores in January and just beforeyear-end completed the purchase of NCD Builders Merchants which added 17 storesto its chain of builders merchants in the Netherlands. 2004 also saw the jointventure established in 2003 by CRH (45% stake) and SAMSE (55%) acquire theremaining 65.3% of the share capital of G. Doras, a regional builders merchantoperating a total of 45 specialist and generalist builders merchanting outletsin the Burgundy and Franche Comte regions of France. Development activity in the Americas Materials Division resulted in 12 add-ontransactions to existing operations plus the commencement of a project todevelop a greenfield quarry near Harrisburg, PA, at a total combined cost ofapproximately euro 0.16 billion. The largest acquisition completed during theyear was Gallo in New Jersey. This business, with owned and permitted reservestotalling 300 million tons, is an ideal fit with Tilcon's activities in NewJersey and is expected to generate significant benefits from consolidation ofexisting quarries and savings in transportation and other operating costs. TheDivision completed 11 other add-on deals across its four operating regions thatcomplement existing operations and continue the focus on acquiring strategicallylocated high quality aggregate reserves. During 2004, the Americas Products & Distribution Division completed 11 dealsand embarked on six major capital projects at a combined cost of approximatelyeuro 0.18 billion. The Architectural Products Group (APG) was the most active group completing fiveacquisitions and committing to the construction of five large pallet paverplants in California, Ohio, Arizona, Pennsylvania and Maryland to service thefast-growing US homecentre and hardscapes market, and a major block and patiopaver plant near Chicago. APG acquisitions comprised the January purchase of a50% stake in Paver Systems with three paver plants in Florida and of GreenleafProducts, which supplies bagged mulch and soil to homecentres and other retailchains from five plants in Florida, Georgia and Mississippi. The acquisition inMarch of an 80% stake in Custom Surfaces, the leading provider of premiumcountertops in Georgia and South Carolina and in December of Creative Surfaces,serving the Birmingham, Alabama market, expanded APG's ties with homebuildersand homecentres. Anchor Block, a Florida-based producer of segmental retainingwalls and architectural masonry was acquired as a bolt-on in December. The Precast Group resumed development activity with the acquisition in August ofMega Cast in Georgia and Newbasis Central in Texas. In July, the Glass Groupexpanded geographically into the Northeast with the acquisition of Floral Glass,a leading fabricator and distributor of architectural glass products withfacilities in New York, Connecticut and New Jersey. The Distribution Groupcontinued its strategy of increasing its presence in major metropolitan areaswith the January purchase of G.W. Killebrew, the largest distributor of interiorproducts in the Hawaiian Islands, and the acquisition in August of Metro RoofingDistributors, a two-branch distributor of windows, siding and roofing productsin Boston, Massachusetts. In June, CRH acquired the final 20% stake in DellOrto, the market leader in glass tempering and glass/aluminium distribution inChile Operational review REPUBLIC OF IRELAND Including share of joint ventures Analysis of year-on-year change Total Acquisitions euro million 2004 2003 change Exchange 2003 2004 Organic Sales 804 732 +72 - - - +72 % change +10% +10% Operating profit 129 130 -1 - - - -1 % change -1% -1% Margin 16.1% 17.8% Operating profit is arrived at before goodwill amortisation charges and profiton sale of fixed assets. In Ireland, residential construction grew strongly, with an estimated record77,000 house completions compared with 68,800 in 2003. Demand from theinfrastructure sector was also strong but eased somewhat in the closing monthsas some major projects were completed ahead of schedule. After a flat firsthalf, the second half of the year brought evidence of improving commercial andindustrial activity. Although product prices failed to compensate for costincreases and margins declined somewhat, volumes for the year showedsatisfactory increases and operating profit was just below the 2003 level. BRITAIN AND NORTHERN IRELAND Including share of joint ventures Analysis of year-on-year change Total Acquisitions euro million 2004 2003 change Exchange 2003 2004 Organic Sales 749 692 +57 +13 - +7 +37 % change +8% +2% +1% +5% Operating profit 64 57 +7 +1 - +1 +5 % change +12% +2% +2% +8% Margin 8.6% 8.3% Operating profit is arrived at before goodwill amortisation charges and profit/loss on sale of fixed assets. While there was an increase in UK housing starts in 2004, overall brick volumesdeclined mainly due to the continued movement to less brick-intensive dwellings.With increased kiln availability following rebuilds, Ibstock brick volumesdeclined somewhat less than the market. Higher energy costs impacted thebusiness but, through a combination of price increases and better productivity,profits improved. Sales and operating profits in our concrete operationsincreased underpinned by a robust performance from the masonry division. Our UKFencing & Security operations had an excellent year driven by governmentspending and strong market positions. In the Materials Division, NorthernIreland operations saw higher activity in housing and infrastructure markets. With organic profit improvements and the benefits of a modest strengthening ofSterling against the euro, full year operating profit shows an increase on 2003levels. MAINLAND EUROPE - MATERIALS Including share of joint ventures Analysis of year-on-year change Total Acquisitions JV to euro million 2004 2003 change Exchange 2003 2004 Assoc Organic Sales 1,286 1,007 +279 -16 +13 +271 -65 +76 % change +28% -1% +1% +27% -7% +8% Operating profit 194 133 +61 -2 +1 +40 - +22 % change +46% -2% +1% +30% +17% Margin 15.1% 13.2% Operating profit, which also includes share of associates' profit, is arrived atbefore goodwill amortisation charges and profit on sale of fixed assets. JV to Assoc: CRH's option to acquire an additional 25% of the Mashav Group inIsrael expired in early 2004, and the status of the Group's existing 25%investment changed from joint venture to associate. Accordingly, with effectfrom 2004, CRH no longer reports its 25% share of Mashav sales, while the shareof operating profit continues to be included in operating profit. With more normal weather and underlying sectoral growth in many of the countriesin which we operate, these operations generated strong organic growth andbenefited from significant acquisition activity to deliver a 46% increase inoperating profit. Finland/Baltics Overall construction activity in Finland improved with investment in residentialand infrastructure more than compensating for small declines in other sectors.Sales volumes were strong through 2004 and Abetoni, the concrete productsbusiness acquired at the start of the year, was integrated smoothly into ongoingoperations. Overall profits grew due to the increase in demand, good performancefrom acquisitions and tight cost control. The Baltic region, including St.Petersburg, enjoyed strong volume growth and results continued to improve. Poland/Ukraine In Poland, cement demand was exceptionally strong in the first half of the yearreflecting more normal weather conditions than in 2003 and accelerated demandahead of the 1st May increase in VAT on construction products. While salesmoderated over the rest of the year, our annual cement volumes increased by over3%. Demand generally benefited from the firmer economic tone and Polish entryinto the European Union in May. Blacktop and aggregates saw good volumeincreases as the Polish national roads programme was rolled out in the secondhalf of the year while our lime business reported improved profits despitehigher energy costs. Overall profits advanced strongly. The Ukrainian economyenjoyed good growth in 2004 and our cement sales and profits increasedsubstantially. Switzerland Construction output increased due to ongoing infrastructural investment andimproved residential construction. Our cement, readymixed concrete andaggregates operations performed well despite intense competition due to thebetter market conditions, supplies to major tunnel projects and the successfulacquisition in January of Hastag, the Zurich-based producer of aggregates andreadymixed concrete. Profits were well ahead of 2003 levels. Spain Despite further growth in construction output, Spanish markets were competitivewith margins in the important Madrid and Catalonia regions remaining underpressure. Although our readymixed concrete volumes declined, improved pricingand operating efficiencies resulted in an outcome similar to 2003. Portugal Our June investment in Secil gives a new platform for growth on the Iberianpeninsula and in the Mediterranean basin. Results for the period of ownershiphave met our best expectations and exceeded Secil's performance in thecorresponding period of 2003. Israel The dominant factor continues to be the difficult political situation. Despitelower overall volumes, profits were ahead of 2003 due to constant improvement inoperating efficiency, ongoing cost reduction and new marketing initiatives. MAINLAND EUROPE - PRODUCTS & DISTRIBUTION Including share of joint ventures Analysis of year-on-year change Total Acquisitions Re-org. euro million 2004 2003 change Exch. 2003 2004 Costs Organic Sales 3,664 2,636 +1,028 -7 +871 +120 - +44 % change +39% -% +33% +4% +2% Operating profit 269 166 +103 - +83 +7 - +13 % change +62% +50% +4% +8% Margin 7.3% 6.3% Operating profit, which also includes share of associates' profit, is arrived atbefore goodwill amortisation charges and profit/loss on sale of fixed assets,and includes re-organisation costs of euro 5 million (2003: euro 5 million). Markets remained subdued in 2004 and failed to sustain the somewhat firmer toneevident in the first half of the year. Against this backdrop, and despite higherinput costs particularly in the second half, our underlying performance improvedand incremental benefits from 2003 and 2004 acquisitions resulted in asignificant advance in overall sales and operating profit. Concrete Products The group achieved significant growth from both acquisitions and legacybusinesses and profits were well ahead of 2003 despite weakness in key marketsand rising raw material costs. Our Belgian operations achieved good growth andsuccessfully passed on input cost increases in contrast to our Dutch operationswhich faced tough competition due to market overcapacity. Despite weakness inthe German economy, EHL maintained volumes and market position although higherraw material costs and selling price pressure led to lower profitability. EHL'sSlovakian subsidiary beat expectations. Our French operations reported improvedresults and successful integration of the Danish operations acquired inSeptember 2003 resulted in a strong performance for that business. Sand-lime Brick This business, acquired with Cementbouw in late 2003, turned in an excellentperformance in its first full year with CRH. Cementbouw Joint Venture Our joint venture in materials trading and readymixed concrete in theNetherlands experienced tough trading conditions in weaker infrastructuremarkets. Clay Products Through better pricing and productivity, these businesses achieved improvedresults despite weakness in the residential sectors in the Netherlands andGermany. Insulation A strong advance in sales was achieved largely due to full year contributionsfrom 2003 acquisitions but also through organic growth despite challengingmarket conditions. However, immediate recovery through higher selling prices ofunprecedented second-half raw materials cost increases proved difficult,resulting in a substantial adverse impact on profit. Building Products Fencing & Security had a good year and the integration of 2003 acquisitions,cost control and other synergies resulted in a good profit increase. Daylight &Ventilation faced disappointing sales in Germany and the Netherlands; however,with the benefit of prior restructuring and good cost control, profits improved.The Construction Accessories group, established in 2003, performed very well inits first full year. Distribution While market conditions were less favourable than 2003, record levels of salesand operating profits were achieved through better performance in the legacybusiness and contributions from acquisitions. Our DIY business in the Beneluxhad another good year despite weaker consumer confidence while our joint venturein Portugal made further progress. In builders merchanting, profits in theNetherlands improved substantially aided by the Cementbouw acquisition and ourspecialist merchants generally performed well although the ironmongery businesshad another difficult year. Merchanting activities in Switzerland made furthersignificant progress with improved sales and an advance in operating profit.Profits in our 100%-owned business in Ile-de-France were lower than in 2003;however, we benefited from our increased stake in associate SAMSE and the Dorasjoint venture. THE AMERICAS - MATERIALS Including share of joint ventures Analysis of year-on-year change Total Acquisitions euro million 2004 2003 change Exchange 2003 2004 Organic Sales 2,842 2,831 +11 -257 +48 +40 +180 % change -% -9% +2% +1% +6% Operating profit 272 291 -19 -26 -4 +6 +5 % change -7% -9% -1% +2% +1% Margin 9.6% 10.3% Operating profit is arrived at before goodwill amortisation charges and profiton sale of fixed assets. Overall, activity levels in this Division benefited from good residential demandoffset by somewhat weaker highway spending. This was reflected in improvementsin heritage aggregate (+6%) and readymixed concrete (+11%) volumes and a modestdecline (-1%) in asphalt volumes. However, escalating energy costs, whichreached unprecedented levels through the busy autumn construction season, fedthrough rapidly into input costs eroding the benefits of price improvements andresulting in an overall margin decline. Although a strong focus on operatingcost reduction delivered a modest improvement in underlying US dollar operatingprofit, an adverse translation impact resulted in lower reported euro operatingprofit for this Division. New England Our operations in New Hampshire, Maine and Massachusetts experienced goodvolumes from solid state highway programmes; however, high energy costs reducedmargins especially in asphalt. Connecticut markets were muted with privateconstruction remaining strong but highway markets were impacted by the statebudget deficit and local political issues while Vermont continued to divertpaving monies to several ongoing large projects. Higher energy costs led tolower operating margins and left profit below 2003 levels. New York/New Jersey Aggregates operations in the New York Metropolitan area benefited from goodmarkets in both private and infrastructure sectors with buoyant residentialmarkets in and around Manhattan combined with several large transit and water/sewer projects. In New Jersey, asphalt margins were lower due to intensecompetition although the aggregates business improved. In Upstate New York,profits in the Albany region improved while in Rochester, despite managementaction, our results declined as the market continued to suffer from cutbacks atseveral large local employers. Overall, results were broadly unchanged on 2003levels. Central In Pennsylvania and Delaware, results declined significantly due to intensecompetition and poor highway markets. West Virginia results improved but ourOhio operations were unable to recover the impact of higher energy costs despitea fairly strong market environment. Michigan was disappointing due to severecutbacks in the highway programme as the state authorities wait to see what there-authorisation of the US Federal highway funding programme means to Michiganbefore addressing their lack of highway funding. Overall profit declined. West This region comprises over 270 locations across a wide geographic area in 12states west of the Mississippi River. Trading conditions varied across theregion but overall market strength, the integration of recent acquisitions andcost reduction programmes resulted in significantly higher profits. Utah andIdaho saw significant volume increases, benefiting from improved residential andnon-residential markets after a number of slack years. Our asphalt business alsoincreased profits as the states continued to refocus their expenditures inasphalt- intensive maintenance projects. Colorado advanced due to strongerhighway markets. Wyoming and South Dakota continued to perform exceptionallywell, while our small operations in New Mexico returned to profitabilityfollowing significant cost reduction. Subdued markets and continued toughcompetition resulted in a slight decline in profits in our Washington andMontana operations. THE AMERICAS - PRODUCTS & DISTRIBUTION Including share of joint ventures Analysis of year-on-year change Total Acquisitions euro million 2004 2003 change Exchange 2003 2004 Organic Sales 3,475 3,182 +293 -278 +104 +149 +318 % change +9% -9% +3% +5% +10% Operating profit 319 268 +51 -23 +11 +18 +45 % change +19% -9% +4% +7% +17% Margin 9.2% 8.4% Operating profit is arrived at before goodwill amortisation charges and profiton sale of fixed assets. The Division had a strong year with residential demand continuing at a goodlevel and ongoing evidence of recovery in the non-residential sector. Internalcost control initiatives and pro-active pricing mitigated the impact of sharpincreases in input costs and, together with strong volumes, led to improvedmargins overall. The Division recorded a 20% increase in sales and a 31%increase in operating profit in US dollar terms with all product groupsreporting strong improvements. Architectural Products (APG) During 2004 APG pursued operational improvements and selective price increasesto meet the challenges of rising energy and cement costs and reported recordsales and profits. The Northeast and South regions, along with clay brickproducer Glen-Gery, performed particularly well. The group saw significant gainswith retail customers and in its Belgard(R) hardscapes business. Precast General improvement in construction markets, as well as a modest turnaround inthe telecommunications sector, resulted in a 10%+ improvement in sales in ourlegacy precast operations. We came into the year with a stronger backlog andmaintained that early momentum throughout the year. Improved prices and overheadcost savings were achieved which helped offset significant increases in steel,cement and fuel and, with strong volume increases, profits showed a strongimprovement. Glass Trading conditions improved in 2004 and a modest recovery in commercialconstruction together with contributions from 2003 and 2004 acquisitionsresulted in significant sales and profit growth. Distribution Overall the business environment for our operations was good in 2004. TheAtlantic seaboard in particular was buoyant; the Midwest, where our presence isnot as large, was softer. The devastating hurricanes in August and September ledto a significant increase in demand in Florida. The steep increases in the priceof many of the commodities handled by the group facilitated further gains ingross margins, although some of these gains may be of a one-time nature. TheDistribution group has had several years of good sales and profit growth andachieved records for both in 2004. South America Our operations in Argentina and Chile delivered improved results. In Argentina,our clay products business achieved a strong performance with increased domesticshipments being complemented by export sales. Our glass business prospered fromstrong export sales. In a competitive environment our Chilean glass businessre-focussed towards value-added products and took aggressive measures on costcontrol to record an improvement in results. International Financial Reporting Standards The results announced today are reported under Irish/UK GAAP. Restated Interim2004 and full year 2004 results for the Group under International FinancialReporting Standards (IFRS) will be made available during the second quarter of2005. The trading statement for the first six months of 2005, to be issued inearly July, will provide guidance under IFRS and the Interim 2005 results willbe reported under IFRS. Outlook While there is continuing volatility in energy and currency markets which couldimpact adversely on economies as the year progresses, the current 2005 outlookfor the various markets in which CRH operates is on the whole positive. In Ireland, overall construction output is expected to decline somewhat ashousing falls back from an all-time high; however on the positive side, a firmergeneral economy should benefit the industrial and commercial sectors. Whilethere is significant Government commitment to ongoing infrastructure projectsand a busy roads programme for 2005, activity may be affected somewhat by theaccelerated completion of projects in 2004 and the timing of new start-ups.Construction output in Finland should be stable with completion of some majorinfrastructure projects offset by increasing demand in industrial and commercialsectors and steady housing. With EU funds now beginning to flow, the Polishconstruction industry should receive a welcome boost in 2005. In Switzerland,cement sales to a number of major infrastructure projects are set to decline asthese projects near completion; however, general market volumes are expected toremain stable. In Spain, construction activity is expected to continue atcurrent levels while Portugal should see growth in the construction sector inline with the projected 2% growth in the economy. The current outlook for theNetherlands is for modest growth driven by new housing and broadly-basedrenovation investment. Belgium is also expected to enjoy stronger housing andcontinued strength in commercial activity. After a good 2004, due in part to taxincentives for the housing market, growth in France is forecast to moderate in2005. Construction demand in Germany is expected to show a further decline.Growth in UK construction is forecast at lower levels than in recent years.Overall, we look to further progress in our European operations in 2005. At this stage 2005 economic growth looks likely to be solid in the US. Housebuilding, which is underpinned by demographics, moderate unemployment andongoing low real interest rates is expected to remain broadly at current stronglevels. The recovery of non-residential construction following the declines ofrecent years picked up pace during 2004 and this positive trend should continuerobustly throughout 2005. TEA-21, the Federal funding programme fortransportation which was due to expire on 30th September 2003, has been extendedto end-May 2005 at an annualised level of US$34.4 billion. A new six-yearprogramme is expected to be authorised towards mid-year 2005 and, although thisis unlikely to benefit the current year, it should lead to stronger volumesthereafter. While State finances are generally improving some still facedeficits and, combined with the delayed Federal funding re-authorisation, thismay result in a modest decline in highway markets in 2005. Taking all thesefactors together, we look to an improved dollar outcome in the year ahead in theAmericas. Against this background, we maintain our relentless emphasis on performance andthe recovery of higher input costs and with our sustained focus on development,supported by our strong balance sheet and cash flow, we look to continuingprogress in the year ahead. * * * * 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 announcement and other factors discussed inour Annual Report on Form 20-F filed with the SEC. Group profit and loss accountfor the year ended 31st December 2004 Continuing operations Acquisitions Total Total 2004 2004 2004 2003 % euro m euro m euro m euro m change Sales, including share of joint ventures 12,232.3 587.4 12,819.7 11,079.8 +15.7% Less: share of joint ventures (338.7) (200.9) (539.6) (305.5) Group sales 11,893.6 386.5 12,280.1 10,774.3 +14.0% Cost of sales (8,136.2) (276.0) (8,412.2) (7,461.3) Gross profit 3,757.4 110.5 3,867.9 3,313.0 Operating costs excluding goodwill (2,642.2) (67.8) (2,710.0) (2,308.5) amortisation Group operating profit excluding goodwill 1,115.2 42.7 1,157.9 1,004.5 amortisation Share of joint ventures' operating profit 38.6 28.8 67.4 39.5 Share of associates' operating profit 21.7 - 21.7 0.7 Operating profit, including share of joint 1,175.5 71.5 1,247.0 1,044.7 +19.4% ventures and associates Goodwill amortisation (96.9) (4.5) (101.4) (75.5) Profit on disposal of fixed assets 8.2 3.1 11.3 13.0 Profit on ordinary activities before 1,086.8 70.1 1,156.9 982.2 interest Group interest payable (net) (126.0) (112.8) Share of joint ventures' and associates' net interest (13.9) (5.2) Profit on ordinary activities before taxation 1,017.0 864.2 +17.7% Taxation on profit on ordinary activities (247.1) (217.6) Profit on ordinary activities after taxation 769.9 646.6 Profit applicable to equity minority interests (7.8) (5.9) Preference dividends (0.1) (0.1) Profit for the year attributable to ordinary shareholders 762.0 640.6 +18.9% Dividends paid (51.0) (43.2) Dividends proposed (124.7) (105.0) Profit retained for the financial year 586.3 492.4 Earnings per share for the year Basic - Including goodwill amortisation 143.9c 121.9c +18.0% - Excluding goodwill amortisation 163.1c 136.2c +19.8% Diluted - Including goodwill amortisation 142.8c 120.6c +18.4% - Excluding goodwill amortisation 161.7c 134.8c +20.0% Cash earnings per share for the year 256.4c 223.4c +14.8% Dividend per share 33.0c 28.1c +17.4% Movements on profit and loss account 2004 2003 euro m euro m At 1st January 2,490.2 2,520.3 Profit retained for the financial year 586.3 492.4 Currency translation effects on results for the year (16.8) (23.7) Currency translation effects on foreign currency net investments (183.3) (498.8) At 31st December 2,876.4 2,490.2 Statement of total recognised gains and losses for the year ended 31st December 2004 2004 2003 euro m euro m Profit for the year attributable to ordinary shareholders 762.0 640.6 Currency translation effects on results for the year (16.8) (23.7) Currency translation effects on foreign currency net investments (183.3) (498.8) Total recognised gains and losses for the financial year 561.9 118.1 Group balance sheet as at 31st December 2004 2004 2003 euro m euro m euro m euro m Fixed assets Intangible asset - goodwill 1,443.5 1,474.5 Tangible assets 5,319.9 5,145.4 Financial assets: Joint ventures - share of gross assets 993.1 560.1 - share of gross liabilities (535.1) (330.4) - loans to joint ventures 83.5 62.3 Associates 149.2 44.6 Other investments 11.7 12.1 702.4 348.7 7,465.8 6,968.6 Current assets Stocks 1,249.6 1,117.6 Debtors 1,829.8 1,681.2 Cash and liquid investments 1,322.4 1,298.0 4,401.8 4,096.8 Creditors (amounts falling due within one year) Bank loans and overdrafts 412.0 510.3 Trade and other creditors 1,638.0 1,499.7 Corporation tax 73.0 77.9 Dividends proposed 124.7 105.0 2,247.7 2,192.9 Net current assets 2,154.1 1,903.9 Total assets less current liabilities 9,619.9 8,872.5 Creditors (amounts falling due after more than one year) Loans 3,351.1 3,095.8 Deferred acquisition consideration 103.4 96.5 3,454.5 3,192.3 Capital grants 11.0 12.7 Provisions for liabilities and charges 854.0 818.0 5,300.4 4,849.5 Capital and reserves Called-up share capital Equity share capital 181.0 179.3 Non-equity share capital 1.2 1.2 Equity reserves Share premium account 2,149.3 2,078.3 Other reserves 9.9 9.9 Profit and loss account 2,876.4 2,490.2 Shareholders' funds 5,217.8 4,758.9 Minority shareholders' equity interest 82.6 90.6 5,300.4 4,849.5 Group cash flow statement for the year ended 31st December 2004 2004 2003 euro m euro m Net cash inflow from operating activities 1,545.0 1,396.2 Dividends received from joint ventures and associates 30.1 19.4 Returns on investments and servicing of finance Interest received 22.2 36.1 Interest paid (139.9) (140.5) Finance lease interest paid (2.4) (0.7) Preference dividends paid (0.1) (0.1) (120.2) (105.2) Taxation Irish corporation tax paid (16.0) (19.6) Overseas tax paid (172.4) (83.3) (188.4) (102.9) Capital expenditure Purchase of tangible assets (520.2) (402.0) Capital grants received 0.1 0.1 Disposal of fixed assets 100.1 77.9 (420.0) (324.0) Investment in subsidiary, joint venture and associated undertakings Acquisition of subsidiary undertakings (498.5) (1,439.0) Deferred acquisition consideration (57.3) (56.8) Investments in and advances to joint ventures and associates (358.2) (79.5) (914.0) (1,575.3) Equity dividends paid (127.1) (122.8) Cash outflow before use of liquid investments and financing (194.6) (814.6) Cash (outflow)/inflow from management of liquid investments (39.4) 110.4 Financing Issue of shares 37.4 13.7 Expenses paid in respect of share issues (0.3) (0.1) Increase in term debt 166.8 688.4 New finance leases/(capital element of finance leases repaid) 31.6 (3.1) 235.5 698.9 Increase/(decrease) in cash and demand debt in the year 1.5 (5.3) Reconciliation of net cash flow to movement in net debt Increase/(decrease) in cash and demand debt in the year 1.5 (5.3) Increase in term debt including finance leases (198.4) (685.3) Cash outflow/(inflow) from management of liquid investments 39.4 (110.4) Change in net debt resulting from cash flows (157.5) (801.0) Loans and finance leases, net of liquid investments, acquired with subsidiaries (7.8) (40.0) (165.3) (841.0) Translation adjustment 32.7 242.8 Movement in net debt in the year (132.6) (598.2) Net debt at 1st January (2,308.1) (1,709.9) Net debt at 31st December (2,440.7) (2,308.1) Supplementary information 1. Translation of foreign currencies These financial statements are presented in euro. Results and cash flows ofsubsidiary, joint venture and associated undertakings based in non-eurocountries have been translated into euro at average exchange rates for the year,and the related balance sheets have been translated at the rates of exchangeruling at the balance sheet date. Adjustments arising on translation of theresults of non-euro subsidiary, joint venture and associated undertakings ataverage rates, and on restatement of the opening net assets at closing rates,are dealt with in reserves, net of differences on related currency borrowings.All other translation differences are included in arriving at operating profit. Rates used for translation of results and balance sheets into euro were asfollows: Average Year-end Euro 1 = 2004 2003 2004 2003 US Dollar 1.2439 1.1312 1.3621 1.2630 Pound Sterling 0.6787 0.6920 0.7051 0.7048 Polish Zloty 4.5268 4.3996 4.0845 4.7019 Swiss Franc 1.5438 1.5212 1.5429 1.5579 Argentine Peso 3.6572 3.3314 4.0488 3.6955 2. Accounting policies These financial statements have been prepared under Irish/UK GAAP on the basisof the policies as set out in the financial statements for the year ended 31stDecember 2003 published in CRH's 2003 Annual Report. 3. Key components of 2004 performance Operating Goodwill Profit on Profit Net Profit Turnover profit amortisation disposals before interest before euro million before interest cost tax goodwill 2003 as reported 11,080 1,045 (76) 13 982 (118) 864 Exchange effects (545) (50) 3 - (47) 7 (40) 2003 at 2004 10,535 995 (73) 13 935 (111) 824 exchange rates Incremental impact in 2004 of: - 2003 1,036 91 (23) - 68 (39) 29 acquisitions - 2004 587 72 (5) - 67 (17) 50 acquisitions - change from jv (65) - - - - - - to associate - rationalisation - - - - - - - Ongoing operations 727 89 - (2) 87 27 114 2004 as reported 12,820 1,247 (101) 11 1,157 (140) 1,017 % change as +15.7% +19.3% +17.8% +17.7% reported % change at +21.7% +25.3% +23.7% +23.4% constant 2004 rates 4. Geographical analysis Sales 2004 2003 euro m % euro m % Republic of Ireland 803.5 6.3 731.6 6.6 Britain and Northern Ireland 748.5 5.8 691.5 6.3 Mainland Europe 4,939.5 38.5 3,635.3 32.8 The Americas 6,328.2 49.4 6,021.4 54.3 Total including share of joint ventures 12,819.7 100 11,079.8 100 Less: share of joint ventures (539.6) (305.5) Total excluding share of joint ventures 12,280.1 10,774.3 Profit before 2004 interestRelated Shares:
CRH