CRH ’05 profit up appreciably, 2006 outlook good

CRH ’05 profit up appreciably, 2006 outlook good
Published: 06 March 2006

Profits at Irish building materials group CRH Plc are expected to have exceeded  Euro 1.25bn in 2005 -- up 14 per cent on 2004 -- and analysts forecast another strong year for the group. The median of 12 forecasts gathered by Reuters Estimates put CRH’s expected pretax profit at 1.256 billion euros in the year to the end of December compared with 1.02 billion euros in 2004, on estimated turnover of 14 billion euros. 
 
CRH, which is due to reports the results on Tuesday, said in January it expected 2005 profit of around this level and announced a slew of deals that showed it had ramped up acquisition spending in the second half of the year. 
 
At the time, Ireland’s third largest listed company said the outlook for its business was on the whole positive, with signs of pick-up in the Dutch economy, US highway markets underpinned by the passage of a new Highway Bill, and following substantial second-half 2005 acquisition activity.  Analysts had expressed concern at the slowdown in acquisition spending in the first half of the year since buys have provided consistent growth for the group. 
 
But CRH said it had spent more than 1.2 billion euros in the second six months of the year, taking total development spending to around 1.45 billion euros. Nevertheless, organic growth is expected to represent 50 percent of CRH’s EBITA growth in 2005, its largest contribution since 1994, Goodbody Stockbrokers’ analyst Robert Eason said.  Eason said the United States had also been a key earnings driver.  Growth in Europe is expected to have been more muted given subdued markets for CRH’s European Products & Distribution business over the period. 
 
CRH is expected to continue to do well in 2006, with signs that trading conditions in mainland Europe are improving.  CRH may give an update on its acquisition of a 26.3 percent stake in Spanish cement maker Corporacion Uniland SA. Privately owned Uniland said last month it was mounting a legal challenge to the 300 million euro purchase. CRH has rejected the allegation that the buy was unlawful.