Eco-cement to hit CRH profits

Eco-cement to hit CRH profits
Published: 26 January 2004

CRH stands to lose Euro10m a year as a result of new government measures to make up to 25 per cent of all cement used in state-funded projects more environmentally friendly.  Draft proposals being considered by Martin Cullen, the environment minister, would force CRH to purchase more eco-friendly cement from third-party sources or convert some of its plants to produce it. Department officials have already held talks on the issue with construction industry representatives and the minister is determined to push through the initiative, which is designed to save about 300,000 tons of CO2 emissions annually.

CRH supplies about 50 per cent of the 4Mt of cement used annually in Ireland, accounting for about six per cent of group profits. The new rules would affect about 15 per cent of this market. The comparative cost of producing the eco-friendly product means the margins are much lower, leading industry watchers to believe it could hit the group¹s bottom line by about one per cent.

Although the company has yet to release its full-year figures for 2003, it said in a recent statement that its operating profit would be broadly in line with the Euro1.048 billion it made in 2002.

The profit margin on GGBS, the eco-friendly cement, is about Euro16 a ton, compared with euro50 a ton for traditional cement. The former is a by-product of steel rather than limestone and has been used in the construction of the Luas, the Drogheda bypass and the Jack Lynch tunnel.
Ecocem, based in Dublin¹s Ringsend, is currently the only company in Ireland producing GGBS.

A spokesman for CRH said that the company was ³aware of the proposals². of the 4Mt of cement used annually in Ireland, accounting for about 6 per cent of group profits. The new rules would affect about 15 per cent of this market. The comparative cost of producing the eco-friendly product means the margins are much lower, leading industry watchers to believe it could hit the group¹s bottom line by about one per cent.

Although the company has yet to release its full-year figures for 2003, it said in a recent statement that its operating profit would be broadly in line with the Euro1.048 billion it made in 2002.