CRH spends €126m to build stake in Bauking to 98%

BUILDING MATERIALS giant CRH is spending €126 million on increasing its stake in German distributor Bauking to 98 per cent.

The Irish group yesterday said that the rate of decline in its sales and profits had slowed since the end of last June.

CRH is to buy a further 50 per cent of builders’ merchant and DIY specialist Bauking in a deal worth €126 million. It bought a 48 per cent share of Bauking in 2005. Under the terms of the deal, CRH will take on an increased share of the German company’s existing debts. This is included in the €126 million purchase price.

According to CRH, Bauking is the leading builders’ merchant and DIY group in northern Germany. It has 128 branches and last year generated earnings of €35 million from sales of €747 million.

CRH said the purchase of the additional 50 per cent would strengthen its position in Germany, which is Europe’s biggest construction market, and provide a platform for future growth.

Chief executive Myles Lee said the deal would increase the group’s German distribution sales to €850 million in a “fragmented market with significant expansion potential”.

In a statement yesterday, CRH said the rate at which its sales had been declining slowed during the second half of the year, which is traditionally busier than the first six months. Third quarter sales were down 4 per cent when compared with the same three-month period last year.

Sales in the first six months of 2010 were down 10 per cent; as a result, the group said that the overall decline for the first nine months of this year was 8 per cent.

The group’s earnings before interest, tax and write-offs were €1.2 billion, compared with €1.4 billion during the same period in 2009. Strong cash flows cut net debt by €800 million to €4 billion at the end of September from €4.8 billion at the end of June.

CRH expects the rate of decline in sales to continue to slow for the rest of the year and anticipates that full-year earnings will be in the region of €1.6 billion, which will be in line with predictions that the group published with its interim results in August.

After taking expected impairment charges of €100 million into account, CRH expects that full-year pretax profits will be in the region of €520-€550 million.