Irish building materials group CRH said today its full-year pretax profit would now decline by a low- to mid-teens percentage rate, worse than the 10 per cent fall anticipated in August.
However, the company, one of the world's biggest suppliers to builders, saw its shares rise over 5 percent as it announced plans to strengthen its balance sheet to cope with the downturn - including reigning in acquisition spend. At 1.02pm, shares in CRH were up 5 per cent at €17.45.
CRH said global business sentiment had worsened due to the financial crisis, hitting its trade particularly in Europe.
"Financial markets have been impacted by an unprecedented series of events which have contributed to an increasingly cautious business climate ... resulting in weaker than anticipated September/October trading in a number of European markets," the firm said in a statement.
CRH said that, in response, it would preserve cash by cutting in capital expenditure, acquisition spend and cancelling a share buyback scheme.
"It is one of the strongest balance sheets in the sector," said Davy analyst Barry Dixon.
"There had also been concern about its refinancing requirements, but they have said they have refinanced €1.5 billion of a €2.8 billion outstanding and are close to completing the remainder," Mr Dixon said.
The group's debt figure at year-end was likely to be between €6 billion and €6.5 billion, but this was well within the company's debt covenants, Finance Director Myles Lee told analysts on a conference call.
He said the firm would call a halt to its long-running takeover spree until markets improved.
"There will be compelling value to be seen in the sector, but it will probably take a lot longer to materialise ... into 2009, or even 2010," he told the call.
CRH added that its American activities had held up since August, while the reduction in full-year earnings per share would be less due to recent share buybacks.
Davy's Mr Dixon said the market had been encouraged further by the possibility of an infrastructure stimulus package in the United States, which could kick-start the sector.
He had been forecasting a 12 per cent fall in pretax profit this year to around €1.7 billion before the statement, but said he would likely reduce that by a further 2-3 per cent.
Reuters