CRH back in profit as building industry picks up
Published 20/08/2014 | 02:30
CRH has €4bn available for takeovers and has been able to borrow on the markets at the lowest price in its history.
The Ireland-based global construction supplies giant reported a return to profit and a 27pc increase in earnings in the first six months of the year.
Sales were up 4pc over the period to €8.3bn - but US growth was dented by an unusually long US winter that slowed construction, the company said.
CRH returned to profit in the first half of 2014 and will pay an interim dividend of 18.5 cents a share on the back of a strong performance in Europe, chief executive Albert Manifold said.
The company is on track to meet its earnings target for this year, despite a slow down in Europe in recent months and the impact of the crisis in Ukraine on CRH's business there, he said.
The impact of the Ukraine crisis remains contained within the country, and has not yet spilled over into neighbouring markets such as Poland, he said.
Ukraine is a significant market for CRH, accounting for €24m of earnings last year.
Overall, numbers published yesterday show CRH's profit after tax was €61m in the first six months of this year, compared to a loss of €71m in the same period of 2013.
The company said it expanded in the first half of the year thanks to a pick-up in US house-building and renewed spending by governments and businesses in Europe.
That extended to Ireland, where Mr Manifold said a pick-up in building activity is being driven by the residential sector in particular.
New building is spreading from Dublin though neighbouring counties, he said.
CRH's finance director, Maeve Carton, said the company has taken advantage of buoyant bond markets to lock in a drastically reduced cost of debt.
CRH raised €600m for seven years on the bond market in July at an interest rate of just 1.75pc, the lowest ever for the company or the sector, she said.
Together with two 2013 bond deals it means the average interest paid by the company has dropped to around 3pc compared to more than 5pc in 2012, she said.
Together with undrawn credit facilities and cash on hand, CRH has €4bn available for acquisitions, the directors said.
The focus in terms of adding on new business is likely to be on the US, which continues to grow strongly in percentage and absolute terms, Mr Manifold said.
In Europe, the industrial dynamics are divided between the faster growing east, where rolling out new infrastructure is still a main priority for governments, and the west where mature infrastructure means service and repair business will do well, he said.
There is "no rush" into emerging markets, he said. Shares in CRH closed down 1.8pc yesterday at €17.79 each.
The company has a €2bn pipeline of potential disposals. (Additional repoprting Reuters)