Building materials group CRH delivered flat adjusted operating profits of £184m as its European operation continued to struggle while the US division saw an uptick. However, the outlook is sluggish for both regions and management warned that the situation in Europe is unlikely to see any improvement this year. Investors took the hint and sold the shares off 5 per cent post results and, even though Deutsche Bank is maintaining its full-year EPS estimate of 0.98¢, on 15 times forward earnings the shares are likely to continue to head south.
In the first half, cash profits declined 1 per cent to €568m (£475m) as sales in Europe, accounting for over half of group earnings, declined 5 per cent and this cut cash profits from the region by 13 per cent. As customer confidence in Europe remains precarious, ongoing cost savings measures will now be extended into 2013. The details of this will be affected by the economic outlook as it unfolds, said chief executive Myles Lee, promising vigilance as CRH continues to focus on cash preservation and keeping a tight rein on expenditure.
By contrast, the US division saw sales rise a fifth as the Dublin-based group benefited from improved activity in the residential market and favourable spring weather. While this pulled demand forward, Mr Lee emphasised that the mood in second quarter, more moderate than the first, is likely to prevail over the rest of the year, noting: "The pace of growth will soften some".
| CRH (CRH | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,162p | MARKET VALUE: | £8.4bn | |
| TOUCH: | 1,162-1,163p | 12-MONTH HIGH: | 1,414¢ | LOW: 891¢ |
| DIVIDEND YIELD: | 4.2% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 1,443¢ | NET DEBT: | 38% | |
| Half-year to 30 Jun | Turnover (€bn) | Pre-tax profit (€m) | Earnings per share (¢) | Division per share (¢) |
|---|---|---|---|---|
| 2011 | 8.2 | 95 | 10.7 | 18.5 |
| 2012 | 8.6 | 117 | 14.4 | 18.5 |
| % change | +5 | +23 | +35 | - |
Ex-div: 22 Aug Payment: 19 Oct £1=€1.26 | ||||
