CRH expects €1.6bn in pre-tax profits for 2008

Building materials giant CRH said it expects full-year profit before tax “in excess of €1.6 billion” for 2008 as the economic slowdown contributes to a “mid-teen percentage decline” when compared with the previous year.

It said unprecedented events in the financial markets in the second half of the year resulted in an increasingly negative business climate across the world, particularly in CRH's European operations.

"As a result, we anticipate that second half profit before tax will show a high-teen percentage decline on the 2007 outturn of €1.234 billion."

CRH said the outlook for 2009 remains "extremely challenging given the severe impact of ongoing turmoil in financial markets" but noted a number of positives. These include lower energy costs and lower interest rates and the prospects of a large-scale US infrastructure package.

The group said negative factors are likely to predominate in the first half of this year but said the positives "should begin to influence sentiment and activity later in the year".

Operating profit at the European building-products division slid about 30 per cent last year, the Dublin-based company said today in a trading statement.

The company said tighter lending policies from banks has stifled demand for homes in the US and Britain, where property sales have now slumped to the lowest since at least 1978.

CRH spent almost €1 billion on acquisitions last year, including a 50 per cent stake in Indian cement manufacturer My Home Industries, and a 35 per cent stake in French builders merchant Trialis.

It also bought UK construction accessories producer Ancon and another 50 other companies.

The group says it had unused bank loans worth over €1 billion available at the end of 2008.

It said construction activity in Poland and Ukraine, which had than compensated for declines in the Irish and Spanish markets in the first six months, slowed through the second half of the year.

Davy analyst Barry Dixon said the 2008 out-turn was broadly in line with forecasts. "The outlook for 2009 is described as extremely challenging. In this environment, the company's main focus is on cash generation and building balance sheet strength."

He said there appeared to have been a further deterioration in European markets since the interim management statement in November.

"This, however, may include some restructuring charges, but conditions have deteriorated on a like-for-like basis nonetheless."