Sales slowing but CRH expecting gains from US storm repair work
BUILDING materials giant CRH expects to benefit next year from the devastation wreaked by Hurricane Sandy on the east coast of the US as reconstruction work gets underway.
But the storm has also severely hampered its materials operations in the region. CRH said that disruption, coupled with ongoing weakness in some European markets, will result in earnings before interest, tax, depreciation and amortisation (EBITDA) in the last three months of 2012 below that achieved in the final quarter of 2011.
Releasing an interim management statement yesterday, CRH said it also expects its full-year EBITDA to be about 3pc lower at €1.6bn in the current financial year than in 2011.
During the third quarter, CRH said the rate of sales growth in the US had slowed compared with the first half, when it was 8pc higher.
In Europe, the pace of sales contraction also accelerated in the third quarter to 7pc compared with the first half, when sales declined 5pc.
The squeeze in the third quarter resulted in an overall like-for-like 3pc fall in sales on a group basis in the third quarter and a 1pc dip for the first nine months of the year.
EBITDA in the third quarter came in at €650m, unchanged on the figure for the third quarter in 2011.
CRH said reported EBITDA for its European operations fell 13pc in the first half of 2012 and it expects the figure for the full-year at the division to be about 15pc lower than the €900m it reported in 2011.
It said that contraction in the Polish construction sector resulted in "much steeper third quarter volume declines" in the third quarter than had been experienced in the first half of the year. In the year to date, cement volumes in Poland have fallen 14pc.
"While market conditions remain very challenging in both Ireland and Spain, the impact of lower volumes and prices is being partly offset by the benefits from ongoing restructuring," CRH said.
EBITDA at its Europe Materials unit is likely to be 10pc lower at about €393m for the full year.
It said its joint venture operations in India have benefited from good volumes and pricing. CRH called off talks last month regarding a possible acquisition in the country.
At its European Products division, CRH said weak confidence and economic difficulties in the eurozone continued to affect activity, with like-for-like sales at the unit down 4pc in the third quarter. The division is expected to report full-year EBITDA of about €227m – 15pc lower than in 2011.
CRH's operations in the US are performing better.
"With favourable early weather and a generally firmer tone in construction markets in the United States, our operations reported an 8pc improvement in like-for-like sales in the first half of 2012," said CRH. "This reflected some pull-forward of construction demand into the first half, and, as expected, we witnessed a much weaker trend during the third quarter with like-for-like sales just 1pc ahead of 2011."