Pretax profit down 27% at CRH

Pretax profit at building materials group CRH fell 27 per cent and the outlook for the Irish market remained "extremely challenging", but the company predicted like-for-like revenue growth in 2011.

CRH reported pretax profit of €534 million for 2010, in line with guidance issued in November, when it predicted it would be in the range of €520 million to €550 million.

Sales fell 1 per cent to €17.1 billion over the period. Excluding the effect of acquisitions and other factors, sales fell 7 per cent on a like-for-like basis.

Earnings before interest, tax, depreciation, amortisation and impairment charges fell by 10 per cent to €1.6 billion. The company booked charges of €100 million in connection with its cost reduction programme, compared with more than €200 million a year earlier.

Depreciation and amortisation charges were higher than the previous year, at €917 million, and included impairment charges of €102 million associated with subsidiaries and joint ventures. Total impairment charges for the period were €124 million, including €22 million relating to associates.

Operating profit was down 27 per cent to €698 million, while earnings per share fell by 31 per cent to 61.3 cent, compared with 88.3 cent a year earlier.

In Ireland, the company said activity fell "steeply" in its materials business with cement volumes declining by 23 per cent. However, the group put in place cost-cutting programmes that reduced capacity, and after charging lower restructuring and impairment costs, operating losses reduced.

CRH also lowered its net debt, decreasing it to €3.5 billion from €3.7 billion a year earlier.

The company invested more than €1 billion in acquisitions and capital expenditure projects during the year, including €536 million on 28 new acquisitions. The bulk of this activity was in the second half of the year, when it spent €376 million on 17 acquisitions. This included the €126 million buyout of a 50 per cent share of German distribution business, Bauking, and €84 million on the acquisition of stone and ready-mixed concrete supplier Risi in Switzerland.

"Overall demand across the group appears to have stabilised in the past three months and, assuming no major market dislocations, we believe that it is reasonable to look forward to like-for-like revenue growth for 2011 as a whole. The level of price progress achieved in 2011 will be key to revenue growth and to the recovery of higher input costs," said chief executive Myles Lee.

"With significant adjustments to our cost and operational base over the past three difficult years, we look to a year of progress in 2011 and to stronger upward momentum thereafter."

Shares in the group were 0.7 per cent up on the Irish market this afternoon, trading at €16.90.