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CRH is on the mend

CRH has returned to profitability, even as weakness in France and poor US weather acted as a drag on the first half.
August 19, 2014

With no repeat of last year's impairment charges, CRH (CRH) returned to profitability in the first half. However, the building materials group's operating performance remained hostage to the weather, with favourable early season conditions in Europe countered by severe weather in the US.

IC TIP: Hold at 1,439p

Trading in Europe improved dramatically across all three divisions - materials, products and distribution - boosting both sales and operating profits. Regional performances were more varied, with good residential demand in the UK countered by continuing declines in France, for example. Earlier expectations centred on continued overall growth in Europe, but trading has eased back in recent months, reflecting to some extent the uncertainty generated by the situation in Ukraine. Consequently, management now expects the second-half performance to be little changed from a year earlier.

By contrast, the US operation saw severe weather conditions hit the materials business - though the unit's €61m (£49m) operating loss was an improvement on the previous year's €79m loss. Profits fell on the products side, too, but strong demand for interior products - which are less exposed to the vagaries of the weather - helped the distribution business boost profits by 31 per cent to €17m.

Analysts at Investec are forecasting full-year pre-tax profits of €816m and EPS of 87.4¢, rising to €1.07bn and 114¢ in 2015 (from €568m and 48.7¢ in 2013).

CRH (CRH)
ORD PRICE:1,439pMARKET VALUE:£10.6bn
TOUCH:1,438-1,439p12-MONTH HIGH:1,811pLOW: 1,314p
DIVIDEND YIELD:3.5%PE RATIO:na
NET ASSET VALUE:1,255¢*NET DEBT:40%

Half-year to 30 JunTurnover (€bn)Pre-tax profit (€m)Earnings per share (¢)Dividend per share (¢)
20138.01-71.0-7.818.5
20148.3261.06.118.5
% change+4---

Ex-div: 27 Aug

Payment: 24 Oct

*Includes intangible assets of €3.94bn, or 533¢ a share £1=€1.25