Weak dollar to affect CRH 'on paper only'

Building materials giant CRH indicated yesterday that continued weakness in the dollar could have an impact on its 2007 results.

Speaking at the group's agm in Dublin, chairman Pat Molloy said the current dollar-euro exchange rate would have taken €65 million off the group's €1.6 billion pretax profit last year.

After the meeting, chief executive Liam O'Mahony said any impact on the bottom line from the weak dollar would be on paper only, as all the group's activities in the US are funded from within the US, while the profits are maintained there.

"It would be purely translational, it would not have any impact in real cash terms," he stressed. The Irish group's American businesses, which are largely concentrated in the US, contributed almost €953 million to the €1.8 billion it earned in operating profits last year.

During the meeting, Séamus Maye, whose company, Framus, is involved in a competition law case against CRH, called on the directors to address the potential fallout from a number of anti-cartel actions and investigations involving the group. He claimed that the ultimate liability from ongoing and potential cases could be €15 billion "at the top end".

These include an investigation of the cement industry in Poland, and a $120 million action taken against CRH subsidiary, Tilcon, by the New York Port Dock Company, which claims the Irish group abused a dominant position in the market.

The Federal District Court has already dismissed this action, but the Port Dock Authority has re-entered the case.

Mr Maye said CRH was accused of destroying important documents during a dawn raid on its Polish subsidiary's offices by that country's competition authority.

Mr O'Mahony said afterwards that the group was co-operating fully with the Polish authorities' investigation.

Mr Molloy said he "totally rejected" Mr Maye's claims. "Our companies do compete, but within the law, they compete fairly," he said.

Shareholders also raised concerns about the group's exposure to the weakening US housing market. This accounts for around 15 per cent of CRH's total business. Mr O'Mahony explained that around 6-7 per cent of this related to repairs, while new house building accounted for the balance. The group broadly estimates that 10 per cent of its overall business comes from house building in the US.

Mr Molloy acknowledged yesterday that the market was softening, but said commercial and infrastructure building was compensating for this.

A CRH statement issued yesterday said overall trading for the first four months of the year was ahead of 2006, with Europe performing particularly strongly.

It will have spent €750 million on acquisitions by the end of this month. CRH's purchase of 50 per cent of Denizli Cement in Turkey and its €350 million acquisition of Swiss group, Gétaz Romang, will account for the bulk of this.