Despite the slump in the share price last week, international building products group CRH will announce bumper results tomorrow. It should produce a profit before tax above €600 million (£473 million), and ahead of most brokers' predictions, compared with €409 million generated in 1998, according to industry sources.
The results will be enhanced by a profit from the sale of Keyline. It will have a further six-month contribution from Ibstock, the British publicly quoted brick manufacturer which was acquired, and a contribution from several addons. And there should be a positive currency translation from the US operations which will benefit the profit and loss account and increase the group's net worth.
Nevertheless, its four main geographical areas should show good underlying growth. The biggest impetus should come from the US operations which have benefited from add-ons and generally buoyant trading conditions.
Another feature of the results will be the domestic operations which are becoming less important to the group. While profits are likely to account for under 20 per cent of the total, sales could be less than 10 per cent. With fewer opportunities to expand in the Republic, that trend should continue.
But in common with other building and construction groups, CRH has benefited from the Irish building industry. Trading profit in the Republic increased to €49.8 million from €40.4 million in the first half due to good volume increases for cement, concrete products and basic material despite competitive pricing.
Irish Cement profits rose despite a disruption of production due to the installation of the new grate cooler at the Platin plant, and this trend should have continued into the second six months.
The only black spot was Premier Periclase, hit by weak demand and pricing.
The latest brokers' review of CRH was from Credit Suisse / First Boston and it reckons that domestic operations will show a rise in earnings before interest and tax from €102.6 million to €120.2 million in 1999 while sales will rise to €619.5 million from €540.9 million. On this basis the profit margin will increase to 19.4 per cent from 19 per cent.
The Americas are projected to increase sales to €3.49 billion from €2.76 billion and earnings before interest and tax to €322 million, from €246.4 million. Margins are forecast to rise to 9.2 per cent, from 8.9 per cent.
The UK operations could reduce sales to €722.5 million from €770.2 million, reflecting disposals but profits are expected to rise to €54.7 million from €36.9 million. The main benefit will be margins.
Continental Europe's operations could raise sales to €1.4 billion from €1.1 billion and profits could rise to €124.9 million, from €65.9 million. This reflects two acquisition in northern Europe, Finnsemenntti and Rudus, for €450 million. Credit Suisse says CRH has had one of the most impressive growths outside the Internet sector. Pointing to its 22 per cent annual return to shareholders over the past decade, it says this has surpassed companies such as Coca Cola, with 19 per cent and Gillette, 21 per cent.
CRH is continuing to expand its core businesses and by acquisition. Last week it announced the takeover of Ohio-based aggregates company, Shelly Company, for €363 million.
