CRH Tuesday said it planned to raise about EUR1.238bn in a rights issue, as it posted a 12.5% fall in full-year net profit, ending 15 consecutive years of full-year growth, and said the outlook is "extremely challenging."
The Irish building materials company, which has extensive operations in the U.S., said net profit for the year to end-December fell to EUR1.25bn from EUR1.43bn a year ago.
Pretax profit fell 14% to EUR1.63bn, in line with market guidance. Revenue was flat at EUR20.9bn, while earnings per share fell 11% to 233.1 cents.
Chief Financial Office Glenn Culpepper told Dow Jones Newswires, "The real test of a management team is when the wind is at your face", but added that CRH has already seen some new projects coming as a result of the US$27bn US stimulus plan for highways and bridges.
In 2008, CRH spent EUR1bn on acquisitions, mostly in the first half, including taking a 45% stake in Indian cement manufacturer My Home Industries and 100% of U.K. accessories producer Ancon.
Looking ahead, Culpepper said, "There’s no question about it. 2009 is going to be challenging. It’s still freezing through most parts of Central and Eastern Europe."
In its rights issue, CRH is offering 152,087,952 new ordinary shares to qualifying shareholders at EUR8.40 per new share on the basis of 2 new ordinary shares for every seven existing ordinary shares.
CRH said EUR500m of the proceeds will be used to pay down debt. The issue is fully underwritten by UBS Limited, J&E Davy, Barclays Bank PLC, BNP Paribas and RBS Hoare Govett Ltd.
Chief Executive Myles Lee said management is focused on cutting costs, generating cash and taking advantage of a "likely increased flow of development opportunities."