CRH reports improved second half performance
CRH expects to report a pre-tax profit for 2003 in early March in lime with the €856m achieved in 2002 in spite of an 18 per cent drop in the first half of 2002. This would represent a profit increase more than 10 per cent in constant currency terms. In Ireland, a stronger housing market was offset by weaker commercial and industrial building activity, while in the United Kingdom better volumes and prices made up for the nine per cent drop in the value of the pound sterling. Volumes in Poland and Finland recovered strongly in the second half, notably in cement, after a weak start to the year. In Spain, the group encountered price pressure in spite of continued strong volume growth. The Continental building products businesses were generally held back by weak building activity but the distribution activities fared better on the back of healthier demand from repair and maintenence.
In North America, the wet weather in the north-east and the Midwest affected volumes and profitability, though profits will have improved in US dollar terms, thanks to acquisitions. The distribution operations did well, but the performance among building products was mixed, with brick and glass volumes affected by weak commercial markets. In the Middle East, CRH did not exercise its option to acquire a further 25 per cent of the Israeli cement producer Mashav, but negotiations are continuing with Clal Industries to achieve a deal that reflects the more difficult situation in that country.
Acquisition and development expenditure during the second half of 2003 amounted to €10127m. On top of the €564m spent during the first six months, this gives a total investment in expanding the CRH business last year of €1581m. The largest deal, by far, was the €693m Cementbouw deal completed last October. The other second half deals concluded involve €18m spent by the European heavy materials arm buying a second lime producer in Poland, resulting in CRH having something like 40 per cent of the Polish lime market, and two ready-mixed concrete batching plants in Finland. The European building products and distribution arm invested €196m. That covered two pre-cast concrete businesses in Belgium and one each in France and Denmark as well as a €25m investment in Fortecrete’s concrete tile operations in England. Unidek, a producer of expanded polystyrene insulation with plants in The Netherlands and in Germany and annual sales of €110m, was also acquired as was Magnetic Autocontrol, a German producer for the fencing and security group. In France, CRH increased its stake in the leading Rhône-Alpes builders’ merchant SAMSE from 11.2 per cent to 20.05 per cent on top of which SAMSE acquired G. Doras, substantially expanding the business northwards into Burgundy and neighbouring areas, with CRH taking a 45 per cent minority stake in Doras.
The North American operations attracted €110m of spending, of which €53m was in heavy building materials. The aggregates and asphalt businesses of Barletta Construction in Maine and Blahnik Corporation in Montana were acquired as were Osterland, a road surfacing business in Ohio, as well as some sizeable aggregates reserves in north-eastern Pennsylvania. An asphalt joint venture was created with Edward C. Levy & Co. in Michigan, while five quarries in Indiana were exchanged for seven quarries in Georgia, Alabama, Tennessee and Michigan. Oldcastle’s architectural products group bought Georgia Masonry Supply, which produces concrete products and distributes bricks and aggregates in the Atlanta area, Supreme Concrete Block, a similar business to the west of Washington, D.C. and the lawn and garden business of Global Stone as well as investing some €9m in a new paver plant at Kansas City, Mo. The North American distribution arm, finally, acquired BASS Supply, a distributor of roofing, walling and window products in the Philadelphia, Pa. area.
