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CRH sees profit growth but plans more asset sales

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CRH CEO Albert Manifold (left) with his predecessor Myles Lee. Picture Jason Clarke Photography.

CRH CEO Albert Manifold (left) with his predecessor Myles Lee. Picture Jason Clarke Photography.

CRH CEO Albert Manifold (left) with his predecessor Myles Lee. Picture Jason Clarke Photography.

Building supplies group CRH said 2013 should represent the trough in its profits as the construction market in the United States improves and the European economy stabilises.

After an unusually long period of bad weather led to a sharp fall in first-half earnings, CRH said this morning that revenue rose 2 percent in the second half of the year, with a smaller decline in Europe boosted by a 5 percent increase in the United States.

Full-year earnings before interest, taxes, depreciation and amortisation (EBITDA) amounted to €1.48 billion, ahead of guidance given in November, the Dublin-based group said.

"We believe that 2013 represents the trough in our profits, and that 2014 will be a year of profit growth," said chief executive Albert Manifold, who took over last month following the retirement of Myles Lee.

"We are encouraged by second-half activity levels in 2013 and by the fact that, while it is still early in the season, trading so far in 2014 has been ahead of last year."

CRH's more positive outlook matches that of France's Saint-Gobain, Europe's biggest supplier of building materials, which said last week that cost savings, innovation and a recovery in the United States would help operating profit to rebound this year.

CRH, which has generated €2 billion from asset disposals since 2007 alongside hundreds of millions of euros spent each year on bolt-on acquisitions, said in November it would undertake a review of its businesses to pinpoint further sales.

It said it had identified 45 business units for disposal, accounting for 3 percent of 2013 EBITDA, and that it had taken a non-cash impairment charge of 755 million euros, mostly relating to Europe, ahead of their sale.

It added that a further group of businesses, representing 20 percent of net assets, required more detailed assessment but that it did not anticipate further impairment charges to arise should a decision be made to exit any of these businesses.

"While this has resulted in significant non-cash impairment charges, we believe that dynamic allocation and reallocation of resources to optimise the portfolio will be key to driving growth and to rebuilding returns and margins over the coming years," Manifold said.

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