STRONG growth in operations in Ireland and North America has helped building materials group, CRH, counter weaker performances in its operations in Britain and mainland Europe.
Half year profits were up 13 per cent to £64.1 million and chief executive, Mr Don Godson, has said the outlook for the second half of the year is positive with Ireland and North America continuing to perform.
"Overall, we anticipate a further year of progress for the group," said Mr Godson.
"We are quite pleased with 1 3 per cent pre tax profit growth, given the deep freeze months in northern Europe and the eastern US and a fairly sluggish British market. We had good performances out of Ireland and the US and Europe performed pretty well overall despite some setbacks," said Mr Godson.
CRH has benefited in the first half from its regional diversification, with the booming building industry in Ireland and some areas of the US outweighing the damage caused to operating profits in Britain and Europe. The operations in Britain suffered from the general weakness in the sector, while the European operations were badly affected by the lengthy winter in northern Europe.
The strength of the Irish operations and the improved margins enjoyed by CRH is indicated by the fact that, while Ireland's share of the group's turnover was virtually unchanged at 14.9 per cent, the proportion of trading profits contributed by Ireland rose from 29.1 per cent to 32.9 per cent.
In Ireland, demand in the Dublin region was particularly high but there was also good progress in the provinces, while the recovery in roadbuilding also contributed. And with the Department of the Environment forecasting a 13 per cent growth in the construction industry in the current year, CRH - as the biggest Irish supplier of cement and building materials is well placed to benefit.
Britain, however, put in a poor performance, with the general weakness in the sector exacerbated by the severe winter weather in the first few months. Margins at the Keyline stores fell against higher sales volumes while the T.B.F. Thompson and Forticrete operations also reported lower results.
Continental Europe produced weaker results, with the severe winter affecting performance in the Benelux countries, while the 7.5 per cent fall in the value of the Dutch guilder, Belgian franc and German mark against the pound had a negative translation impact of over £1 million from operations in these countries.
The Spanish operations were unexpectedly weak, with activity slowing down in the second half, although CRH's investment in the Ozarow cement works in Poland produced a positive contribution.
In the US, where CRH's operations are in a number of regional economies, some of which are performing better than others, there was a broad improvement.
Analysts, however, had mixed feelings about the results, particularly the severity of the downturn in Britain and mainland Europe. The likelihood is that current profit forecasts of £190-£195 million will either remain intact or be trimmed slightly.
CRH's balance sheet remains in fine shape - even in the light of the Tilcon acquisition and further acquisitions between now and the end of the year. CRH's cash generating ability - cash flow in the first half of 23.59p per share or almost £85 million - allows the group to pay down the cost of its acquisitions quickly and keep its debt/ equity ratio at comfortable levels.
