CRH profits rise 20% to €383m

FIRST-HALF profits at CRH rose by a fifth to €383 million, despite poor trading at the company’s European operations.

CRH said its US businesses had seen strong growth across all its divisions and when acquisitions were included, operating profits for the six months to end June had risen 68%.

Operating profits at CRH’s three European divisions were subdued because of slow economic growth across the continent and poor weather in the first few months of the year, which hit construction activity.

Earnings were just 2% ahead of the same period in 2004, though it would have booked a loss were it not for the inclusion of profits from its Portuguese cement business Secil, which it bought last year.

“It was a tale of two continents: Europe weak, US strong,” CRH chief executive’s Liam O’Mahony said yesterday.

CRH said the strength of its American divisions more than helped to make up for the weakness in Europe. The American housing market remained strong and its DIY and builders merchants business were doing very well from rebuilding hurricane-hit Florida.

The company was able to pass on the oil price increase to its customers, which limited the damage caused by soaring energy costs.

The only downside from the US side of the business was a €2 million hit to pre-tax profits caused by currency fluctuations, but the recovery of the dollar against the euro meant there would be little impact on full-year profits.

Sales in Ireland were 8.9% higher at €561.3 million, with operating profits almost 17% ahead of the same period a year ago at €70.5 million. However, the rise in profits was slower than in recent years.

Mr O’Mahony said the buoyant construction sector continued to help its Irish business, but the company would be seeking price rises to offset the impact of higher oil costs.

Group sales for the period were 13% higher at €6.3 billion, with the increase a mixture of organic growth and the inclusion of sales from acquisitions.

Shareholders were rewarded with a 17% rise in the interim dividend to 11.25 cents, to be paid out of earnings per share of 56 cents.

In the first half of the year, the company spent €231m on acquisitions, less than it had in previous years, though the rate of spending had picked up in the past couple of months, with takeovers worth €190m completed.

Mr O’Mahony said the company was on the look out for acquisitions, but would not rush into any deal unless it added value to CRH.

He said the company was studying the Chinese market but said there were “lots of difficulties doing business in China.”