IMPRESSIVE INTERIM results from CRH were tempered by a somewhat downbeat forecast for full-year trading, but some analysts believe this has already been factored into the company's share price, writes SUZANNE LYNCH

The descent in CRH’s shares over the last year – accelerated by the company’s announcement six months ago of a 23 per cent drop in pre-tax profits in 2010 – is something that doesn’t seem to be going away for the company, despite signs it has effectively cut costs, is confident about implementing price rises to reflect rising input costs and still has the best balance sheet in the business. Chief executive Myles Lee said yesterday the share price reflected weakness in the equity market generally, while pointing out that CRH has outperformed industry peers.

In many ways, it is no surprise the stock is failing to capture the attention of market participants. In light of global economic conditions, the fact a building materials company, particularly one so heavily exposed to the troubled US market, is posting a 10 per cent rise in earnings before interest, tax, depreciation and amortisation (ebitda) is somewhat counter-intuitive.

While CRH’s US materials division underperformed during the first half, the company’s established position in the region is an important cog in the wheel of its long-term success. As Lee said yesterday, the continuing deficit in the quality of US infrastructure means demand for CRH’s repair, maintenance and improvement activity continues, even as demand for new builds may continue to be under pressure. CRH also believes high employment levels linked to the construction industry will put pressure on US authorities to maintain federal spending at its present levels.

The group yesterday highlighted its “disciplined” approach to acquisitions. The company has been criticised by some for its relatively conservative expansionary strategy of small bolt-on acquisitions, particularly since its €1.2 billion fundraising two years ago. The company’s troubles with Portuguese partner Semapa, which ended with CRH having to sell its 46 per cent stake in the business, are believed to stem from a difference in approach.

Lee yesterday defended the company’s decision not to “splurge” on acquisitions after 2009, though he indicated the company wants to step up acquisition activity. Among the targets for growth are China – which still only represents a couple of per cent of CRH’s overall revenues – and Poland, Ukraine and western Russia. Ireland now represents just 2 to 3 per cent of CRH’s revenues.

While this an inevitable and logical outcome for a company on a successful growth path, it is significant the success of another Irish-listed company is dependent on increasing activity overseas.