CRH plc today issues this statement for the six months ended 30 June 2009. The Interim Results for 2009 are due to be announced on 25 August 2009.
While the rate of profit decline in the second quarter eased substantially compared with the first three months, the global recessionary environment led to weaker than anticipated trading in May and June. Against this backdrop CRH expects that EBITDA* for the seasonally less profitable first half of the year will show a decline of approximately 40% (H1 2008: €1.1bn).
Operating profit for the six months to June is expected to be approximately a third of last year’s outcome (H1 2008: €0.7bn), reflecting a higher decline than at EBITDA level due to the fact that depreciation and amortisation charges are more equally balanced than EBITDA between the first and second halves.
Profit before tax is expected to be of the order of €0.1bn after restructuring costs of approximately €75m and an adverse translation impact at profit before tax level of approximately €20m. This compares with a first-half 2008 profit before tax outturn of €0.6bn.
With the very difficult trading environment across many of our major markets, the Group’s focus on continuous and sustainable cost savings has intensified and new measures are being implemented which will deliver cumulative further annualised gross savings of €555m in 2009 and 2010. These savings are in addition to the €895m announced in January 2009 and will bring the total annualised savings over the period 2007-2010 to €1.45bn.
Operating cash outflow for the half year is expected to be in line with 2008, with tight control of capital expenditure and delivery of a lower seasonal working capital outflow broadly compensating for lower profitability.
While overall trading conditions are expected to remain extremely challenging there are a number of positives which should impact to a greater extent in the seasonally more profitable second half. These include further benefits from the aggressive cost reduction measures undertaken in 2008 and first half 2009, more moderate second-half energy related input costs than in 2008 and improving infrastructure spend in the United States and some European markets.
Although second-half profitability will be lower than in 2008, the rate of decline is expected to improve compared with the first half of 2009. Meanwhile the Group continues to focus resolutely on commercial delivery and on the implementation of further cost reduction and cash generating measures.
The Group has significant financing capacity, bolstered by the March 2009 Rights Issue, with the result that CRH is well positioned to take advantage of appropriate development prospects in our traditional rigorous and disciplined fashion. While we are beginning to see an increased flow of potential opportunities, in the current economic climate our development efforts remain focussed on transactions that offer compelling value and exceptional strategic fit.