5th Jul 2005 07:00
CRH PLC05 July 2005 N E W S R E L E A S E 5th July 2005 CRH PLC INTERIM TRADING UPDATE CRH plc, the international building materials group, is issuing this tradingupdate for the half-year ending 30th June 2005. The Interim results for the sixmonths ending 30th June 2005, prepared in accordance with InternationalFinancial Reporting Standards (IFRS), are due to be announced on Tuesday, 30thAugust 2005. Overview Our AGM statement issued on 4th May 2005 indicated that overall trading had beenpositive in the first four months with a strong start in our American operationspartly offset by the effects of severe March weather in Northern Europe whichhampered activity in a number of our operations. Through May and June ourAmerican operations have continued to perform strongly and, although ourEuropean operations have benefited from a return to normal seasonal weatherpatterns, the overall trading environment for these businesses remains subdued.Against this backdrop, CRH expects that profit before tax for the six months to30th June 2005 will show a percentage increase in the high teens compared with2004 (2004: • 319 million on an IFRS basis). Europe Materials While markets in Ireland remain very competitive, growth in residentialconstruction and continuing recovery in commercial and industrial constructionhas resulted in good volume increases and our policy of phased price increasesis yielding benefits. Our activities in Finland have recovered well fromweather-related setbacks in March. Polish operations were most affected by thelate winter weather and trading has also suffered by comparison with first half2004 when demand was artificially accelerated ahead of the 1st May increase inVAT on construction products. In Switzerland, while cement operations enjoyedstrong demand from the major Lotschberg tunnel project, demand for concreteproducts and aggregates was impacted by poor early weather. Our Spanishoperations have enjoyed very busy first half trading conditions withimprovements in both volumes and prices. Secil, the Portuguese cement, concreteproducts and aggregates producer, in which CRH acquired a 49% stake in June2004, has had a positive start to the year. With a strong incremental acquisition impact due to the first-time inclusion ofCRH's share of Secil's results for January to May, first half operating profitfrom this Division is expected to show an improvement on the 2004 level. Europe Products The Products Division continues to experience generally subdued markets andtrading over the early months was not helped by severe March weather. In Concrete Products, our architectural operations (pavers, tiles and blocks) inthe Benelux, Germany and the UK were impacted by weather and weak demand.Structural operations (floor & wall elements, beams, vaults and drainageproducts) were less severely affected, helped by modest improvements in Dutchhousing activity and good underlying demand in Belgium and Denmark. In Clay Products, first-half Ibstock brick volumes in the UK were below 2004levels; however, further price improvements were achieved to offset the impactof sharp energy cost increases. Our Clay operations in Mainland Europe havebenefited from better pricing and productivity. Our Insulation activities have continued to suffer from volatility inenergy-related input costs with results also affected by re-organisation ofactivities to better deal with the challenging trading environment. In BuildingProducts, Daylight & Ventilation operations faced disappointing sales in Germanyand the Netherlands. Despite flattish markets our Fencing & Security andConstruction Accessories businesses have performed well to date. Overall, with continuing tough trading conditions in our Insulation activitiesand generally subdued markets, operating profit in this Division is expected tobe lower than in the first half of 2004. Europe Distribution Against the background of subdued Dutch retail demand our DIY business in theBenelux delivered good cost control and continued to benefit from the October2003 Cementbouw acquisition. While poor weather in March affected trading in ourDutch builders merchanting operation, this business is benefiting from thefirst-time inclusion of results from NCD Builders Merchants which was acquiredin December 2004. French merchanting activities were also adversely impacted bypoor weather; however, our operations in Switzerland continued to improve. Overall, first half operating profits in Europe Distribution are expected to besimilar to 2004. Americas Materials First half activity in the Americas Materials Division has exceededexpectations. A good start to the year in the West and New York/New Jerseyoperations, combined with an improved performance in the New England and Centraloperations, has resulted in strong first half heritage advances in aggregates,asphalt and readymixed concrete volumes. Average first half sales prices havealso shown good increases and we have entered the seasonally more importantsecond half of the year with solid backlogs at prices well ahead of 2004 levels. With higher volumes and prices the operating result for the first half of theyear is expected to show a substantial improvement on the 2004 outcome. Americas Products Our Precast, Architectural Products and Glass businesses have each had apositive first half against a backdrop of sustained strong residential activityand an ongoing pick-up in non-residential investment. The Precast Group has seengood demand particularly across western and southern states with improved pricesand overhead cost savings continuing to offset input cost increases.Architectural Products has seen good demand for construction, retail andhardscape products and further gains at its Glen-Gery brick operation, wherebetter volumes and prices more than compensated for higher energy costs. TheGlass Group has benefited from a strong first half sales advance combined with ashift in product mix towards higher value insulated and fabricated items.Despite higher input costs, our South American operations have performed aheadof expectations. Overall, these activities are expected to deliver a strong first half profitadvance. Americas Distribution The Distribution Group has performed particularly strongly through thetraditionally quieter first half of the year continuing to build on thesignificant progress of recent years. Markets in Florida were buoyant reflectingvery strong maintenance and repair work in the aftermath of the devastatinghurricanes experienced during August and September 2004. First half operating profits are expected to show a substantial profit advance. Development First half development expenditure amounted to approximately • 231 million ofwhich 35% was in Europe and 65% in the Americas. While this is a lower pace ofspend than in recent years, we continue to work on opportunities foracquisitions across all our operations and remain committed to completingtransactions at prices that will contribute to long-term value creation for ourshareholders. Financial The Group's cash flow and financial position remain very strong. Higher USshort-term interest rates will result in an increase in the finance chargecompared with first half 2004 (2004: • 64 million on an IFRS basis); EBITDA/netinterest cover for the 12 months to end-June 2005 is expected to beapproximately 12 times. Outlook In the US, the economy and overall construction market continue to be strongalthough, as always, activity levels vary by region. Economies in Europe aregenerally subdued, with little sign of any imminent acceleration in demand inthe larger Eurozone economies. Overall, we are encouraged by results to date inachieving recovery of higher input costs and look to further progress in thisregard in the months ahead. Based on a continuation of the current US$/euro exchange rate, the translationimpact on full year profit before tax compared with 2004 will be minimal. We have had a good start to 2005. The recent sharp increase in the price ofcrude oil is of course unhelpful for world economies and will add to costchallenges in the months ahead. However, with our sustained focus on costeffectiveness and operational performance, we expect to make further progress inthe more important second half of the year. ----- 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 trading update and other factors discussedin our Annual Report on Form 20-F filed with the SEC. ----- CRH will host an analysts conference call at 8.00 a.m. BST on 5th July 2005 todiscuss this Statement and the Development Strategy Update. The dial-in numberis +44 20 7162 9919. A recording of the conference call will be available from 10.00 a.m. BST on 5thJuly 2005 by dialling +44 20 7031 4064. The security code for the replay will be662858. Contact at Dublin 404 1000 (+353 1 404 1000) Liam O'Mahony Chief ExecutiveMyles Lee Finance DirectorMaeve Carton Group Controller CRH plc, Belgard Castle, Clondalkin, Dublin 22, Ireland TELEPHONE +353.1.404 1000 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:
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