Shares in CRH (CRH) fell nearly 6 per cent after the building materials group recorded a first-half loss and analysts downgraded their earnings estimates. True, prior half-year profits were flattered by €196m (£168m) of disposal gains, but even at the operating level profits were still down sharply from €162m to €41m.
The extended winter took a severe toll on the group's European operations, resulting in a 91 per cent collapse in operating profits, from €34m to €3m, on CRH's products business in the region, while the materials division turned the previous half-year's €63m profit into an operating loss of €10m. In the US, losses in the materials business deepened from €66m to €79m due to poor weather, but growth in the new-build market lifted profits on the products side by over a third to €88m.
CRH continued to reduce its cost base to reflect ongoing weakness in key European markets, and in addition to the €125m of savings already targeted, the group is introducing further restructuring that will save an additional €60m. However, management continued to make a number of bolt-on acquisitions, spending €470m on 18 transactions that are expected to add annualised sales of around €330m, of which €101m were achieved in the first half.
Broker Davy was forecasting full-year EPS of 69.1¢, down from 74.5¢ in 2012, but now expects to downgrade profit estimates by around 8 per cent.
| CRH (CRH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,344p | MARKET VALUE: | £9.8bn | |
| TOUCH: | 1,343-1,345p | 12-MONTH HIGH: | 1,554p | LOW: 1,088p |
| DIVIDEND YIELD: | 4% | PE RATIO: | 30 | |
| NET ASSET VALUE: | 1,392¢* | NET DEBT: | 41% | |
| Half-year to 30 Jun | Turnover (€bn) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2012 | 8.27 | 102 | 13.4 | 18.5 |
| 2013 | 8.01 | -71 | -7.8 | 18.5 |
| % change | -3 | - | - | - |
Ex-div: 28 Aug Payment: 25 Oct *Includes intangible assets of €4.37bn, or 599¢ a share £1=€1.17 | ||||
