US operations to boost CRH profits

Ian Guider

In a trading update yesterday, the company said profits for the first six months to end June will “show a percentage increase in the high teens” compared with the same period in 2004.

The company’s European businesses had a difficult start to the year because of poor weather conditions but have “benefited from a return to normal seasonal weather patterns”, though the overall trading environment “remains subdued.”

Its businesses in the Americas will make up for lost ground in Europe, with activity in the US particularly strong.

“Overall, we are encouraged by results to date in achieving recovery of higher input costs and look to further progress in this regard in the months ahead,” CRH said.

“We have had a good start to 2005.

“The recent sharp increase in the price of crude oil is of course unhelpful for world economies and will add to cost challenges in the months ahead. However, with our sustained focus on cost effectiveness and operational performance, we expect to make further progress in the more important second half of the year.”

The company said its Irish cement business was benefiting from the growth in residential construction and a rebound in commercial and industrial construction activity.

The company said it spent E231 million so far this year on acquisitions, somewhat lower than the pace of spending in recent years. Around two-thirds of the money was spent in the Americas.

“We continue to work on opportunities for acquisitions across all our operations and remain committed to completing transactions at prices that will contribute to long-term value creation for our shareholders,” the company added. Looking ahead to the second half of the year, CRH said the US economy appears to be strong, although Europe remained “subdued” with little sign of any imminent acceleration in demand in the larger Eurozone economies.

Brokers yesterday upgraded their forecasts for earnings per share (EPS) this year for the company.

“We are increasing our 2005 EPS forecast from 175c to 178c, which represents a 10% improvement on 2004,” Davy Stockbroker said in a research note.

CRH said that if the current foreign exchange rate between the euro and dollar continued, there would be little impact on its result from currency translation.

The rise in US interest rates will push up its debt repayment cost in the first half, it added.