CRH beats earnings forecasts

Construction group CRH has reported better than expected earnings for 2012, with EBITDA (earnings before interest, tax, depreciation and amortisation) of €1.6 billion coming in 2 per cent ahead of forecasts.

The group also announced this morning that its chief executive, Myles Lee, will retire from CRH at the end of 2013, following completion of a five year term.

Revenues at the group advanced by 3 per cent to €18.7 billion, while EBITDA increased by 1 per cent on 2011, helped by “strong recovery in residential construction and improving overall economic activity in the United States” Mr Lee said. Sales in the Americas division advanced by 15 per cent, but in contrast, European sales fell by 7 per cent, with Mr Lee noting that “European businesses had to contend with weakening consumer and investor confidence within the Eurozone”.

Operating profits fell by 3 per cent to €845 million, after combined restructuring and impairment charges of €88 million. Profit before tax declined by 5 per cent to €674 million, with an earnings per share of 76.5 cent.

In Ireland, construction activity continued to fall, with domestic cement volumes 17 per cent lower than in 2011.

The group’s dividend per share will be maintained at 62.5 cent, with a final dividend of 44 cent recommended.

The group spent €256 million in the first half of 2012 on 18 acquisition and investment initiatives, to strengthen its existing market positions and add “valuable and well-located aggregates reserves”. The second half of the year saw a step-up in the level of development activity with 18 transactions at a total cost of €390 million, with the largest transaction being a majority stake in Trap Rock Industries, an integrated aggregates and asphalt business in New Jersey.

It disposed of assets valued at €859 million during the year, including its 49 per cent stake in Portuguese cement producer Secil and the sale in April of its wholly-owned Magnetic Autocontrol business.

Mr Lee, who joined CRH in 1982, becoming finance director in November 2003, will be 60 when he retires. The board of CRH has appointed a committee, headed by chairman Nicky Hartery, to seek a successor for Mr Lee.

Looking ahead, “assuming no major financial or energy market dislocations”, Mr Lee said that the group expects that ongoing improvements in its businesses in the Americas, “combined with further profit improvement initiatives throughout our operations will outweigh continuing trading pressures in our European segments”, will enable the group to “achieve progress” in 2013.

The group also reported this morning that it will terminate all legal disputes with Cementos Portland Valderrivas (CPV), the largest Spanish-owned cement producer.

CRH has agreed an asset swap with CPV, which will see the Irish construction group transfer its 26 per cent stake in Corporacion Uniland, a major Spanish manufacturer of
cement, ready-mixed concrete, mortar and aggregates, to CPV. In consideration, CPV will transfer its 99 per cent stake in Cementos Lemona, an integrated cement, RMC and aggregates business, located in northern Spain, to CRH.

CRH will also acquire Southern Cement Limited, a cement importation business, based in Ipswich, England, as part of the transaction.