CRH boosts American profitability

CRH's turnover improved by 3.2 per cent last year to €18,659m while the EBITDA was off by one per cent to €1640m. There were 36 acquisitions during the year and the outlook for acquisition opportunities is deemed positive. Trading profit declined by three per cent to €840m and after other charges, including a net interest charge 12.7 per cent higher at €258m and a €230m gain on disposals, compared with €55m in 2011, the pre-tax profit declined by 5.2 per cent to €674m. Excluding exceptional items, the underlying pre-tax profit was 7.7 per cent lower at €661m.

The net attributable profit was off by 6.4 per cent to €552m. Net debt at the end of December was 14.9 per cent lower at €2964m and the gearing level came down from 32.9 per cent to 28 per cent, as shareholder's funds were a marginal 0.1 per cent lower at €10,573m.

Capital expenditure was virtually unchanged at €575m. European turnover, which includes the still relatively modest contribution from the Asian operations, declined by 6.7 per cent to €9306m, while in the Americas turnover rose by 15.4 per cent to €9353m. In terms of EBITDA, the European contribution declined by 15.3 per cent to €787m, while the American contribution rose by 12.8 per cent to €853m. 

The European heavy building materials turnover declined by 10.1 per cent to €2685m, but the EBITDA was only down by 7.1 per cent to €405m. Domestic cement deliveries fell by another 17 per cent in Ireland but the trading loss was cut as costs and active capacity were reduced. In northern and eastern Europe, cement shipments fell by 11 per cent in Poland, though its market share did improve somewhat, by eight per cent in Switzerland and by six per cent in Finland. Belgian cement volumes were also disappointing. Ukrainian volumes, on the other hand, rose by 32 per cent in a market that was off by five per cent, and the lower cost led to a marked improvement in profits. A €7m lower gain from the sale of emission allowances to €31m also affected the profit contribution from the European cement activities.

CRH has just acquired Cementos Lemona with a 1.25Mta cement capacity near Bilbao and Southern Cement in Ipswich, England, in exchange for its 26.4 per cent stake in Cementos Portland Valderrivas. The cement operations in Asia only improved in India, while they declined in Turkey and, more notably, in China. Aggregates and concrete activities saw notably lower volumes in Spain and they were also down in Ireland, Poland and The Netherlands, while they were helped by an acquisition in Finland and good downstream volumes in Switzerland.

European building products turnover declined by 6.3 per cent to €2481m and the EBITDA dropped by 21.7 per cent to €152m. Concrete products, which account for roughly half the profits, showed lower results in most markets, but did improve in Denmark and in central Europe. The clay activities represented 10 per cent of EBITDA and volumes were lower and prices were under pressure, except for the important British market where prices did improve. Lightside building products also declined, but by less than concrete and clay products. The European distribution activities generated a turnover 4.6 per cent lower at €4140m and the EBITDA declined by 13.9 per cent to €230m. General builders' merchants accounted 50 per cent of the EBITDA from its 426 branches, while plumbing and heating contributed 20 per cent from 119 outlets. The DIY business, which operates 238 stores, accounted for the remaining 30 per cent of the EBITDA.

In North America, the heavy building materials turnover improved by 13.1 per cent to €4971m and the EBITDA was 6.8 per cent higher at €566m. The 16 acquisitions during the year cost €230m and added seven active quarries and 560Mt of reserves, eleven batching plants and 17 asphalt plants. Volumes were up flat overall in aggregates and some two per cent lower excluding acquisitions, with average prices improving by two per cent though margins were a bit lower.

Ready-mixed concrete volumes rose by two per cent to some 7.3Mm³ and prices improved by one per cent overall. Asphalt volumes were two per cent ahead, but excluding acquisitions were down by two per cent. Bitumen costs rose by seven per cent, but unit costs rose by just four per cent thanks to lower energy costs and an increased use of recycled materials. Margins improved thanks to an average price increase of five per cent. The turnover from paving and construction services was broadly unchanged and margins were maintained thanks to efficiency improvements as strong competitive pressures continued.

Turnover in building products staged an 18 per cent recovery to €2806m and the EBITDA advanced by 24.4 per cent to €204m. Architectural products saw an underlying sales growth of three per cent and improved its trading profit, thanks to an improving house-building market in many regions. Pre-cast products, which represent a quarter of EBITDA, with volumes being ahead by 19 per cent in the traditional product lines and by 12 per cent overall. The architectural glass and storefronts business, which represents a fifth of turnover, increased its penetration in a difficult market environment.

The South American operations in Argentina and Chile represent the remaining five per cent of the EBITDA and the profit was slightly higher overall. The American distribution business increased turnover by 18.1 per cent to €1,576m and the EBITDA rose by 27.7 per cent to €83m, with 75 per cent of the EBITDA coming from exterior products