CRH reports strong growth in European revenues
Construction group grows revenues by 10% in region as it prepares to divest 10% of its assets
CRH’s newly appointed chief executive, Albert Manifold. After reporting a loss of €215 million in 2013, the group benefited from improving economic conditions in Europe in the first four months of the year. Photograph: Alan Betson / The Irish Times
Building materials group CRH reported a 10 per cent increase in European revenues in the first four months of the year, as economic conditions in the region continue to improve. The construction giant, which will hold its agm in Dublin at 11 am today, now expects earnings to be “somewhat ahead” of last year.
In Europe, sales rose by €0.25 billion or 10 per cent as improving economic conditions, combined with better winter weather, benefited construction activity. In the US, weather conditions were not so benign, and as a result, like-for-like sales for the groups Americas operations grew by 2 per cent.
In Ireland, CRH said it is seeing a pick-up in construction activity, and volumes to date are about 10 per cent ahead of a very weak 2013.
Overall, the group is forecasting earnings for the first half of the year to be about € 0.5 billion, up from €0.4 billion in 2013.
Looking to the rest of the year, the group said that it expects second-half performance to “be ahead of last year”, although the strong growth seen so far this year is “likely to moderate”.
In Ukraine, “the outlook remains uncertain”, while in the US, it expects “progress” in the second half of 2014.
“Against this backdrop, and assuming no major financial or energy market dislocations, with the benefit of contributions from acquisitions and cost savings measures we expect second-half group EBITDA to be somewhat ahead of last year”.
So far this year, CRH has spent €60 million on seven acquisition and investment transactions, most of which were related to its products business in the US. Following a review of its group assets, CRH has determined that about 80 per cent meet its “strategic and financial criteria”. Businesses accounting for approximately 10 per cent of its net assets are non-core and will be divested, with asessment of the remaining 10 per cent expected to be completed in the third quarter of 2014.
The group also gave an update on its cost reduction programme, noting that it is “well on track” to deliver incremental savings of € 100 million for 2014, which would bring cumulative savings since 2007 to € 2.5 billion by the end of 2014.