CRH Interim statement 1Q14

CRH Interim statement 1Q14
07 May 2014

According to the CRH 1Q14 interim statement, the company reports that in Europe, the improving trend evident in the second half of 2013 has continued in the first four months of 2014, and the economic backdrop continues to stabilise. This, combined with the absence of the prolonged winter conditions which impacted last year's early season trading, benefited construction activity in most of CRH's markets and cumulative like-for-like European sales to end-April were 10 per cent (approximately EUR0.25bn) ahead of the first four months of 2013.

Weather patterns in the United States were much less positive than Europe, and many regions, particularly in the eastern half of the country, experienced very cold conditions which impacted early season activity for the second consecutive year. As a result, despite overall economic progress, like-for-like sales to end-April for our Americas operations were just two per cent (approximately EUR0.05bn) ahead of 2013.

Given normal seasonal weather patterns, CRH expect trading in the Americas to improve in May and June as the 2014 construction season gets underway for the company's materials operations. Continued improvements in results are forecast for Europe in May and June, underpinned by the stabilisation of the economic backdrop in the company's major European markets. As a result of these factors, CRH expect Group EBITDA in the less significant first half of the year to be approximately EUR0.5bn (2013: EUR0.4bn). In the United States, the Irish building company forecasts an improvement in housing and non-residential construction in 2014, with infrastructure activity likely to be stable. Although the mild weather conditions in the corresponding period of 2013 make the comparatives more demanding, CRH still expect progress in the Americas overall in the 2H14.

In Europe, the good start to the year in much more favourable weather conditions is encouraging. While the company continues to expect second-half performance to be ahead of last year, CRH believe that the strong year-to-date rate of organic growth is likely to moderate in the second half. CRH remain focussed on implementing the cost initiatives already announced. In Ukraine, while there has been limited impact on trading to date from the political unrest the outlook remains uncertain. In Europe, the cumulative like-for-like European sales to end-April 2014 were 10 per cent ahead of the first four months of 2013.

CRH's Materials operations in Poland and Ukraine started the year well, with mild weather benefiting infrastructure activity. By the end of April our like-for-like cement volumes in Poland were around 70 per cent ahead of a severely weather-impacted 2013. Despite the difficult political backdrop in Ukraine, like-for-like cement volumes for our business were up approximately 30 per cent. The Swiss and Benelux operations also benefited from good demand, with cement volumes well ahead of last year. As expected, Ireland is seeing a pick-up in construction activity, and volumes to date are about 10 per cent ahead of a very weak 2013. Market conditions remain challenging in Spain. However, with the benefit of the Lemona cement plant acquired in February 2013, sales are well ahead of last year. In line with expectations, the residential sector in Finland remains under pressure and cement volumes were approximately five per cent lower than last year. Overall, cumulative like-for-like sales for Europe Materials were eight per cent ahead of the first four months of 2013.

In February 2014 CRH announced completion of the initial phase of its ongoing portfolio review. This phase concluded that business units accounting for approximately 10 per cent of the company's assets (and approximately three per cent of 2013 EBITDA) are unlikely to be able to meet the group's financial objectives. An orderly process to divest these non-core business units identified for disposal is underway.

CRH has now determined that approximately 80 per cent of the group's net assets are in businesses which meet the group's strategic and financial criteria. The company is currently assessing the businesses which account for the remaining 10 per cent of its net assets (and approximately seven per cent of 2013 EBITDA) where fit or returns potential are not yet clear, and CRH expects to complete this exercise in the 3Q14. CRH will report Interim Results for the six months ending 30 June 2014 on Tuesday 19 August 2014.

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Tagged Under: 1Q14 CRH