3rd Jan 2008 07:00
CRH PLC03 January 2008 N E W S R E L E A S E 3 January 2008 FULL YEAR 2007 TRADING UPDATE STATEMENT CRH plc, the international building materials group, today issues this tradingstatement for the year ended 31 December 2007. The Preliminary Results for 2007are due to be announced on Tuesday 4 March 2008. Highlights • CRH expects 2007 profit before tax to be close to euro 1.9 billion giving a high-teen percentage increase on 2006 (euro 1.602 billion) and a fifteenth consecutive year of profit and earnings growth. • Acquisition spend in the second half of 2007 amounted to euro 1.2 billion resulting in a record full year acquisition spend of approximately euro 2.2 billion. • 2007 EBITDA/net interest cover is expected to remain high at approximately 9 times (2006: 9.7 times). • The phased reduction in dividend cover to a targeted 3.5 times for the 2008 financial year continues. With a strong financial position the Board has decided to introduce a share repurchase programme, limited to a maximum of 5% of the 547 million Ordinary Shares currently in issue. CRH remains committed to an active development programme while maintaining an investment grade credit rating. • In Europe, with a continuing strong trading performance from Materials operations and good full year profit advances in Products and Distribution operations CRH anticipates 2007 operating profit of approximately euro 1.1 billion (2006: euro 0.814 billion). • The expectation is for 2007 operating profit from CRH's Americas activities to be approximately US$ 1.35 billion (2006: US$ 1.196 billion). At the average 2007 US $/euro exchange rate this would amount to approximately euro 0.985 billion (2006: euro 0.953 billion at the average 2006 rate). • While as ever there are risks, CRH is well positioned across its operations to deal with the evolving market circumstances while continuing to take advantage of an ongoing strong pipeline of development opportunities. With a relentless emphasis on margin development through price and cost effectiveness, we remain focused on our twin goals - performance and growth - and on delivering a sixteenth consecutive year of profit and earnings growth in 2008. ________________________________________________________________________________This Trading Statement contains certain forward-looking statements as definedunder US legislation. By their nature, such statements involve uncertainty; as aconsequence, actual results and developments may differ from those expressed inor implied by such statements depending on a variety of factors including thespecific factors identified in this Statement and other factors discussed in ourAnnual Report on Form 20-F filed with the SEC. CRH will host an analysts' conference call at 8.00 a.m. GMT on 3 January 2008 todiscuss this statement and the Development Strategy Update. The dial-in-numberis +44 20 7162 0025. A recording of the conference call will be available from10.00 a.m. GMT on 3 January 2008 by dialling +44 20 7031 4064. The security codefor the replay will be 778507. A presentation to accompany this call isavailable on CRH's website at www.crh.com. ________________________________________________________________________________ Contact CRH at Dublin 404 1000 (+353 1 404 1000)Liam O'Mahony Chief ExecutiveMyles Lee Finance DirectorEimear O'Flynn Head of Investor RelationsMaeve Carton Group Controller Profit CRH expects to deliver another robust performance in 2007 with full year profitbefore tax close to euro 1.9 billion giving a high-teen percentage increase on2006 (euro 1.602 billion). This represents CRH's fifteenth consecutive year ofprofit and earnings growth. The expected full year profit before tax outturn is after an adverse translationimpact of approximately euro 70 million principally attributable to a weakeraverage 2007 US$/euro exchange rate of 1.3705 (2006: 1.2556). The first half of the year saw a particularly strong start in Europesignificantly outweighing more challenging conditions in the Americas resultingin a euro 144 million increase in profit before tax to euro 670 million (2006:euro 526 million). The second half has seen underlying profit growth in both Europe and theAmericas complemented by the benefits of CRH's active development programme. Asa result, despite a more significant adverse exchange translation impact, thesecond half of the year is expected to show similar profit growth in euro termsto that reported for the six months to June resulting in profit before tax forthe period of over euro 1.2 billion (2006: euro 1.076 billion). We anticipate that the 2007 profit before tax outcome will reflect an increasein profit on disposal of fixed assets (2006: euro 40 million) and in the Group'sshare of associates' profit after tax (2006: euro 47 million). Development Total acquisition spend in 2007 amounted to approximately euro 2.2 billion, anew record for CRH. First half expenditure of euro 1 billion comprised theacquisition of Swiss builders merchant Getaz Romang completed in May; thepurchase of a 50% stake in Denizli Cement in Turkey and the buyout of theremaining 50% of Paver Systems in the US announced in April; the acquisition ofHarbin Sanling Cement Company in China announced in February plus 31 otherinitiatives announced in the Development Strategy Update of 2 July. Second halfspending of euro 1.2 billion included the August buyout of the remaining 55% ofCementbouw BV in the Netherlands; completion of four separate transactions bythe Americas Materials Division as announced in September; the purchase ofcertain Cemex assets in Florida and Arizona announced in late November plus astrong flow of traditional CRH development opportunities outlined in theDevelopment Strategy Update released today. 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 years ofapproximately euro 0.7 billion targeted at modernising and expanding cementproduction in three key European markets and providing CRH's first investment inUS cement. Financial While the significant 2007 development spend and higher interest rates willresult in an increase in net finance costs compared with 2006 (euro 252million), with continuing robust cash generation EBITDA/net interest cover forthe year is expected to remain high at approximately 9 times (2006: 9.7 times).CRH remains very well positioned to take advantage of a strong pipeline ofdevelopment opportunities while continuing its phased reduction in dividendcover to a targeted 3.5 times for the 2008 financial year. In addition, theBoard has decided to introduce a share repurchase programme. This programme willbe limited to a maximum of 5% of the 547 million Ordinary Shares currently inissue. CRH remains committed to an active development programme whilemaintaining an investment grade credit rating. Europe Materials Following a significant advance in first half operating profit, Europe Materialshas continued to perform strongly in the second half. Our operations in Central/Eastern Europe were particularly busy, while overall construction activity inIreland continued at a high level as infrastructure and non-residentialconstruction offset the ongoing decline in residential activity. Overall, weanticipate full year 2007 operating profit of the order of euro 0.6 billion,which would represent an increase of approximately 40% compared with the 2006outturn of euro 0.421 billion. Europe Products These operations delivered a marked improvement in operating profit and asignificant margin advance in the first half of the year. The second half of2007 has seen a slower pace of demand growth in core Mainland European markets,most particularly in Germany. Nevertheless, we expect full year operating profitto exceed euro 0.3 billion (2006: euro 0.221 billion). Europe Distribution Our Distribution activities delivered a much improved performance in the sixmonths to June. Although like-for-like progress relative to last year was slowerin the second half, the Getaz Romang builders merchanting business inSwitzerland , acquired in May, has delivered a strong performance. Our currentexpectation is for full year operating profit from Distribution operations ofapproximately euro 0.2 billion (2006: euro 0.172 billion). Europe Overall With a continuing strong trading performance from our Materials operations andgood full year profit advances in our Products and Distribution operations weexpect 2007 European operating profit of approximately euro 1.1 billion (2006:euro 0.814 billion). Americas Materials Good price improvements and ongoing cost reductions have contributed to improvedmargins and a strong full year organic operating profit improvement against anindustry-wide backdrop of lower like-for-like volumes. This combined with anexcellent performance from APAC, which was acquired at end-August 2006, isanticipated to result in full year operating profit comfortably in excess of US$0.75 billion (2006: US$ 0.596 billion). Americas Products Our Americas Products activities delivered a resilient performance through thefirst half of 2007 with growth in non-residential construction and profitimprovement measures broadly offsetting the impact of a sharp decline inresidential construction. These businesses have continued to perform robustlyand, despite the continuing turbulent backdrop in financial and housing markets,we currently expect that full year operating profit will be only slightly belowthe record 2006 outcome of $0.47 billion. This would represent a verysatisfactory outcome in tough circumstances. Americas Distribution Like-for-like trading comparisons for the second half of the year improvedsomewhat compared with the first half and we currently anticipate that the fullyear operating profit margin generated by these activities will be in the 5% -5.5% range indicated when announcing our Interim results in late-August. This isexpected to result in operating profit of the order of US$ 0.1 billion (2006:US$ 0.13 billion). Americas Overall Our expectation is for full year operating profit from our Americas activitiesof approximately US$ 1.35 billion (2006: US$ 1.196 billion). At the average 2007US $/euro exchange this would amount to approximately euro 0.985 billion (2006:euro 0.953 billion at the average 2006 rate). Outlook Current forecasts for 2008 point to continuing economic growth in our mainmarkets, although at a slower pace than in 2007. Against this background,organic growth in our European activities remains well underpinned by acontinuing strong dynamic in central and eastern countries together withmoderate progress expected in the broader Eurozone. These operations willfurther benefit in 2008 from the euro 1 billion of acquisition activityundertaken during 2007. In the Americas, our US residential operations faceanother testing year but we expect that our non-residential and infrastructurebusinesses will continue to perform well. Our goal is to broadly maintainlike-for-like US profitability through our balanced exposure to the USresidential, non-residential and infrastructure sectors, while deliveringexpected returns from the euro 1.2 billion of acquisitions completed in theAmericas during 2007. While as ever there are risks, CRH is well positioned across its operations todeal with the evolving market circumstances while continuing to take advantageof an ongoing strong pipeline of development opportunities. With a relentlessemphasis on margin development through price and cost effectiveness, we remainfocused on our twin goals - performance and growth - and on delivering asixteenth consecutive year of profit and earnings growth in 2008. * * * * * 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 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
CRH