CRH’s earnings profile shifts towards Europe

CRH’s earnings profile shifts towards Europe
Published: 05 March 2008

CRH increased turnover by 12.0% last year to EUR20,992m and the EBITDA advanced by 16.5% to EUR2,860m. European turnover rose by 19.9% to EUR10,714m, while in the Americas there was a 4.9% advance to EUR10,278m.  In terms of EBITDA, the European contribution rose by 29.3% to EUR1,468m, while America delivered 5.4% more at EUR1,392m. The group pre-tax profit improved by 18.9% to EUR1,904m, in spite of the weaker US dollar, providing the 15th year of consecutive annual growth, and the net attributable profit was 17.5% higher at EUR1,438m.  Net debt at the end of December was 14.9% higher at EUR5,163m to give a gearing level of 64.4%, compared with 63.2% a year earlier.  Capital expenditure was 23.6% higher at EUR1,028m, but spending on acquisitions was 6.1% lower at EUR1,858m.
 
Cement shipments in Poland increased by some 17%, with prices moving ahead by around EUR10/t.  In the Ukraine, prices rose by some 50% and in both countries cement prices are now in the mid-EUR60s.  Shipments of cement, aggregates and concrete also showed good growth in Finland and regional demand led to higher shipments for CRH in Switzerland. The Irish EBITDA was stable, as was also the case in the Baltic states.  The Spanish results benefited from higher prices and good cost control and the Uniland associate achieve a good profit improvement, while in Portugal, demand remained depressed and increased volumes were exported. In 2008, volumes are expected to decline in Spain and in Ireland, but the continued growth in Poland and the Ukraine should allow the group to advance further.  The cement associates in Turkey and Israel showed improved underlying performances.  Building products reported a 13.9% improvement in turnover to EUR3,628m and the EBITDA rose by 27.7% to EUR461m, with generally better results in concrete products and, in Britain and Poland, also for clay products.  In distribution, acquisitions helped boost turnover by 23.3% to EUR3,435m and EBITDA by 24.3% to EUR261m. It is interesting to note that Poland is now a bigger contributor to CRH’s profits than Ireland. In fact, the 7.2% that Ireland contributed to the group compares with around 11% for Poland and the Ukraine combined and 12.4% for the Benelux area.
 
The North American the US$200m joint venture in cement should start production at its 1.1Mta integrated works in Florida towards the end of this year, taking CRH into North American cement production.  Turnover in building products declined by 1.7% to EUR3510m and the EBITDA fell by 7.5% to EUR468m, with architectural products and pre-cast representing some 70% of the profit and Latin America is still being a fairly minor contributor, though its share is increasing.  The distribution arm was the worst hit by the decline in US housebuilding activity, with turnover off by 8.6% to EUR1,323m and the EBITDA falling by a quarter to EUR90m.  Higher prices and increases in road funding should boost the aggregates-based US operations in 2008, a year in which the contribution from the American building products and distribution must be expected to fall further.