CRH has seen a sharper than expected slowing down in activity in Europe during September and October, while the American businesses have been performing very much in line with expectations.
For the year, the European trading profit is likely to fall from €1,106m to no approximately €1,050m, while in the Americas, the trading profit can be expected to decline from US$1,343m to somewhere in the region of US$1,150m, with the group pre-tax profit declining by some 15% to about €1,600m to €1,650m. Capital expenditure is expected to amount to roughly €1,000m this year, falling around €750m in 2009, which should then be lower than the depreciation charge by at least 10%.
In the European heavy building materials business, the growth in Poland and the Ukraine is unlikely to be able to continue to offset the weakness in Ireland and Spain in the second half and the profit growth is likely to be lower, suggesting a trading profit o €530m to €540m this year compared with €586m in 2007. In building products, the trading profit is expected to decline by around a quarter, with the British brick business being particularly badly hit and incurring heavy rationalisation costs, the distribution profit will be down somewhat on the back of tougher markets, notably in the Benelux countries
In the Americas, very much dominated by the USA, heavy materials and building products are expected to profit reductions of around 15% and 20% respectively, but the much smaller distribution site should produce a substantial profit improvement of may be 30%. The cement joint venture in Florida is about to enter the commissioning phase and the 26 batching plants and six concrete block plants there that CRH bought from Cemex last year will add to the vertical integration benefits. It date, CRH’s US ready-mixed concrete sales are down by about 22%, but prices are 3% higher as the cost of cement and transportation have risen strongly, bringing pressure on margins.