CRH makes contingency plans for break-up of euro

IRELAND’S biggest company — CRH Plc — is making contingency plans for a possible break-up of the euro as the debt crisis crimps sales growth in the region.

While countries leaving the euro was “hopefully unthinkable,” the Dublin-based supplier of building materials is making preparations “as any responsible company should have in place,” chief executive Myles Lee said.

“As the market concerns about the eurozone intensified, we have seen that like-for-like sales growth moderating through the back end of the year” in the euro region, he said in an interview with Francine Lacqua on Bloomberg Television.

European leaders began talks yesterday to frame the fifth “comprehensive” solution in 19 months to the region’s debt crisis that led Ireland to seek an international bailout last year. Germany expressed pessimism about the outcome of the talks, which are scheduled to finish tomorrow.

Last month, Mr Lee said he expected the fourth quarter to be flat this year rather than showing an improvement as the debt crisis affects investment. Europe accounted for 58% of CRH’s €8.2 billion of first-half sales.

“We are hoping the summit over the next few days will provide some more concrete solution to the issues,” Mr Lee said. “We’re concerned that if the European authorities don’t get ahead of markets on this that it could have a negative effect on demand in the eurozone in 2012.”

The European Central Bank yesterday cut interest rates for a second straight month, to try to fend off a recession. ECB policy makers meeting in Frankfurt lowered the benchmark interest rate by a quarter percentage point to 1% to match a record low.

And CRH will formally join the FTSE-100 index on this day week (December 16), at close of business, meaning its shares will formally begin trading on the index on the following Monday (December 19).

Three companies — Inmarsat, Investec and Lonmin — are being demoted to the FTSE-250 list; leaving room for inclusion on the top index for CRH, and Russian firms Evraz and Polymetal International. CRH initially announced its decision to switch its primary share listing from Dublin to London — in order to more accurately reflect its investor base — in November. As much as 90% of CRH’s shareholders are based outside Ireland.