Materials firm to barely break even but confident of second-half upturn
Building materials group CRH has announced that it expects to roughly break even in the first half of this year, with a 20% fall in earnings.
In a trading update for the six months to 30 June 2010, the firm said pre-tax profit would be “close to breakeven”, compared with a €100m (£83m) profit in the first half of 2009.
And earnings in terms of EBITDA would fall around 20% on the €650m (£541m) recorded for the same period a year earlier.
However, the rate of decline in sales slowed, with sales over the 12 months to the end of June down 10%, compared with a 14% drop in the year to the end of April.
And the firm said that earnings in terms of EBITDA in the “seasonally more important second half” were likely to be higher than last year’s €1.15bn (£957m), partly thanks to cost cutting and currency movements.
Operating profit for the first half-year is expected to fall to around half the figure of €240m (£200m) recorded for the first half of 2009.
Restructuring costs of approximately €30m (£25m) also contributed to the bottom line, although these were lower than the €74m spent on cost cutting in the first half of 2009.
CRH said the measures taken to cut costs and reduce excess capacity since 2007 delivered total cumulative annualised savings of €1.35bn (£1.12bn) by the end of 2009, with a further €365m projected for 2010/11.
However, net debt at the end of June 2010 was around €1bn higher than the €3.7bn (£3.1m) reported at the 2009 year-end.
The firm’s interim results for 2010 are due to be posted on 24 August 2010.
The group also announced it had spent €133m (£111m) on 13 acquisitions in the first half of 2010, and is investing a further €19m (£16m) in Yatal Cement as its share of funding for two projects in north-east China.
Myles Lee, CRH chief executive, said: ”We are seeing a good flow of bolt-on opportunities across our businesses and we continue to monitor wider developments in our industry; however, we are maintaining a patient approach in progressing transactions in light of the challenging market backdrop.”