US weather may cause CRH sales to ‘disappoint’, analysts say

Irish building materials giant’s shares had surged as much as 14% after Trump election

CRH’s Oldcastle unit in Atlanta is the US’s largest cement and construction and materials group. Photograph: Brenda Fitzsimons

CRH’s Oldcastle unit in Atlanta is the US’s largest cement and construction and materials group. Photograph: Brenda Fitzsimons

 

CRH, whose shares soared as much as 14 per cent following Donald Trump’s election as US president, risks reporting disappointing first-quarter sales later this month as its Americas division was hit by harsh weather last month, according to analyst at Deutsche Bank.

Dublin-based CRH, whose Oldcastle unit in Atlanta is the US’s largest cement and construction and materials group, is expected by analysts to be one of the main beneficiaries from Mr Trump’s $1 trillion (€0.9 trillion)plan to upgrade the country’s roads, airports and rail lines. However, shares in CRH have fallen back by almost 6 per cent from their January highs amid concerns about Mr Trump’s ability to deliver on key election promises.

Deutsche Bank said in a note to clients on Thursday that CRH, which posted a 9 per cent surge in first-quarter sales last year, faces reporting a weak result for the same period this year, particularly in the Americas, as it grappled with difficult weather conditions in March.

Caveat

“Similar to last year, management will no doubt caveat that the first quarter brings only a small portion of the annual profits, and ahead of this we remain comfortable with our full year 2017 forecasts,” said analysts including Glynis Johnson and Xavier Marchand at the German investment bank.

“However, with sentiment towards [the] US likely to be contained in the first half by tough comparables and rising raw material costs, and any acquisition accretion difficult to forecast at this time, we continue to see better risk/reward elsewhere.”

Deutsche Bank estimates that CRH will deliver 5.8 per cent revenue growth this year, to €28.7 billion, outstripped by a 9.6 per cent surge in pre-tax profits, to €1.85 billion.

The analysts expect CRH, which is Ireland’s largest publicly-quoted company with a market capitalisation of €26.8 billion, to deliver more detailed guidance on its full-year figures when it posts its first-quarter trading update on April 26th as it holds its annual general meeting.

Shares in CRH fell as much as 1.9 per cent in Dublin on Thursday morning to €31.98.