CRH profits down 77 per cent

Iseq heavyweight CRH has reported first-half pre-tax profits which were down 77 per cent on the same period a year earlier.

The building materials group said pre-tax profits for the first six months of 2010 totalled €25 million, as against profits of €108 million a year earlier.

Revenues declined by 8 per cent from €8.29 billion to €7.66 billion while Ebitda (earnings before interest, tax, depreciation and amortisation) fell 20 per cent from €651 million to €520 million. Sales revenue declined by 8 per cent.

Operating profit was down 51 per cent to €118 million from €241 million a year earlier.

Basic earnings per share declined 79 per cent from 12.2 cents to 2.6 cents. Cash earnings per share fell 21 per cent from 75.7 cents to 59.9 cents.

CRH said the 2010 interim dividend has been maintained at 18.5 cent - in line with last year's level.

During the first six months of the year, the group spent €159 million on 14 acquisitions and investments. It made a further six acquisitions in July and August at a cost of €86 million.

CRH said construction activity in Ireland continued to run well below 2009 levels with volumes 24 per cent lower and pricing still "very competitive."

"European economic indicators have been more encouraging ... however concerns relating to the recovery in the United States have increased with a continuing flow of disappointing economic data," the company said in a statement.

It said it currently expect that full-year group Ebitda will show a decline of around 10 per cent compared with the 2009 level of €1.8 billion.

"With a robust balance sheet and an anticipated strong second-half cash inflow the group is well positioned to respond to the current challenges and, against a tougher than anticipated second-half backdrop, is continuing to focus on cost reduction, cash generation and the identification and completion of suitable development opportunities," said CRH chief executive Myles Lee.

Separately, chief operating officer Albert Manifold said in an interview with Reuters that weak commercial construction and a pull-back in US state and local spending had put sales behind expectations in July and August.

Mr Lee told analysts US stimulus spending would be lower than forecast this year, with some spending delayed to 2011 and 2012. Public spending in hard-up states was lower than expected, he added, without specifying whether they were cancelling or postponing contracts.

Shares in CRH, which makes up about a third of Iseq since the collapse in banking stocks, were down 16 per cent at €11.65 by 12.15pm, dragging the bourse down.

"This is a disappointing outlook, particularly coming so close to the July statement and in the context of more positive volume growth outlook from Vulcan and Martin Marietta," Davy Stockbrokers analyst Barry Dixon said. "The scale of the downgrade is very significant."

"The one comforting fact is that it looks like acquisition spend is picking up," Robert Eason, analyst at Goodbody Stockbrokers wrote in a note.

Additional reporting: Reuters