Profits up 14% at CRH Irish leg

THE Irish leg of CRH’s giant operations was the only one not to buckle in the first half of the year.

It boosted profits by 14% to €68 million, however, on the back of strong residential construction and infrastructure activity.

That activity will be less prevalent in half two, and the expectation is that profits overall in the Ireland will be more or less flat year-on-year.

However, the expectation is that with €550m acquisitions at its back in the first half of 2003 alone followed in July by one of the biggest deals ever done by the group in Holland, worth well over €600m, that CRH will grow sales and profits in the second half.

This was confirmed by chief executive Liam O’Mahony, who said full-year profits should be ahead of last year, excluding adverse currency effects of around 77m.

Overall the group has pursued a focused strategy, but its rating in the market is well down relative to its peers. This has resulted in the Buy recommendation being restated yesterday by Robert Eason of Goodbody Stockbrokers.

Joe Burnelll of Davys is also bullish about the group and is sticking to his pre-tax profit forecast of €818m for the year and an EPS of 126.5c.

The acquisition pipeline looks good for the group and despite the huge outlay in July, the group is still expected to continue its strategic acquisitions.

While it is unlikely to get much added advantage from the upturn in the US economy this year, the outlook for the group remains quite positive and Goodbody has put a projected price value on the shares of 18 against yesterday’s more disappointing 50 cent dip in price to 16.55.

Despite its continuing strong acquisition spend, the group’s gearing is strong at 30%, regarded as a real comfort factor relative to some of its peers in the sector.