CRH cuts Q1 earnings estimate on the back of bad weather

Building materials giant CRH has said that its first-half earnings are likely to be slightly down on a year-on-year basis, but that its traditionally more significant second half should show growth; mainly driven by its Americas division.

In a trading update, released to coincide with the company’s annual general meeting yesterday, the group noted that the longer-than-anticipated winter conditions that engulfed most of the continent, drove sales in its European operations down by 12% — on an annualised basis — in the first four months of 2013.

Like-for-like sales for the same period were down by 2% in the Americas operation, was mainly due to bad weather conditions.

The general improvement evident in US economic and construction trends has led CRH to predict a strong second half to the year.

“Assuming normal weather patterns for May and June, we expect profits to advance in the Americas, as the recovery in residential and non-residential activity continues and as our materials operations gear up for the 2013 construction season,” the company said in its update.

CRH is due to issue its first-half results in August, but said yesterday that EBITDA for the six months is likely to amount to around €400m; down from the €523m for the first half of 2012.

However, overall second-half EBITDA should be ahead of the €1.04bn recorded last year, due to cost-saving measures, acquisition contributions and performance from its operations on the other side of the Atlantic.

“Assuming no major financial or energy market dislocations, we expect the headwinds in Europe to be outweighed by progress in the Americas,” the company added.

While most of CRH’s European operations suffered from the harsh winter weather since the turn of the year, Ireland and Spain were also hurt by the continued challenging market conditions.

Yesterday’s AGM also saw management again deny accusations by some shareholders of anti-competitive practices in the Irish market.

The company said that it expects a ruling early next year on its appeal of a €25m fine, imposed in 2009 over alleged cement price fixing on behalf of one of its Polish subsidiaries.