Obama stimulus plan to aid CRH

CRH will benefit from Barack Obama’s $30 billion (€23bn) stimulus plan, which will be used to build highways and bridges across the US.

Davy Stockbrokers said the plan could see CRH’s total group earnings jump between 10% and 15% a year over the next three years. CRH shares fell 40c to €18.20 yesterday.

The money will be spent within three years and at least 50% of it must be obligated and contracts awarded within 120 days of the act being signed into law.

Davy Stockbrokers says this implies that most of the funds will be spent on “ready to go” projects.

“These will largely be repair and maintenance jobs, which is positive for CRH,” said analyst, Barry Dixon.

The 120-day rule should affect CRH’s 2009 earnings in its Americas materials division, which accounts for more than 25% of group profits. Davy Stockbrokers is assuming an 8% decline in volumes in CRH’s Americas materials division in 2009.

While the industry was concerned about the 120-day contract period, the US government was keen to ensure that the impact of any stimulus plan was immediate, Mr Dixon said.

“The last time the US government introduced a highway stimulus package was in the recessionary period in the early 1980s.

“Most of the funds were earmarked for new highway projects which took a number of years to plan,” said Mr Dixon.

Davy Stockbrokers believes the stimulus plan will have an immediate impact on spending and on CRH earnings.