Despite better-than-expected first-half results, the share price of building materials group CRH fell back on profit-taking and on the announcement of a share issue to raise funds for acquisitions. After a strong run in recent days, the shares closed €1.09 down at €18.75.
Pre-tax profits were up 14 per cent to €180 million (£141.7 million) before exceptional items but after goodwill amortisation. Earnings per share were 10 per cent ahead at 32.75 cents, or 21 per cent ahead at 37.26 cents before goodwill amortisation. And cash earnings per share were 31 per cent ahead at 76.73 cents. Shareholders will get an interim dividend of 6.7 cents per share, up 14 per cent.
In the six months to the end of June, CRH benefited from buoyant construction in the Republic and favourable weather and good levels of activity in mainland Europe, as well as the inclusion for the first time of major European acquisitions. Translating sterling and US dollar earnings into pounds added €8 million to profits.
Chief executive Mr Liam O'Mahony was confident that 2000 "will be a year of good progress for CRH". After a strong first half, the group would benefit in the current half from plant upgrades and acquisitions in 1999 and 2000, he said. Good demographics and increasing infrastructural requirements would continue to underpin construction in the Republic, while the outlook in most of its mainland European markets was positive and order books in North America were strong, he said.
But over-capacity in clay markets in the Netherlands and Germany, and higher energy and bitumen costs in the US were a concern, he said, adding that the outlook for its South American operations "remains depressed".
Group sales, at €3.65 billion, were up 27 per cent on same period a year ago while trading profits before goodwill amortisation were 40 per cent ahead at €279 million. Trading profits after goodwill amortisation were just marginally ahead at €260.8 million, from €258.5 million, but the 1999 figure included an exceptional profit of €79.6 million on the sale of Keyline. Acquisitions chipped in €16.4 million of the €260.8 million profit.
A geographical breakdown of trading profits shows an 18.3 per cent rise in the Republic to €58.9 million on sales which were 10.7 per cent ahead at €305.4 million. CRH said Irish Cement and Roadstone-Wood reported higher sales and profits while maintaining underlying margins.
In Britain and Northern Ireland, trading profits (after goodwill amortisation of €2.5 million) were up 18.2 per cent to €32.8 million on sales which were 25.1 per cent up at €354.1 million. Describing the housing market there as "flat", CRH said Ibstock's profits were unchanged, while profits fell at the insulation business. But profits at Forticrete rose on the back of a firm industrial/commercial sector.
Group operations in mainland Europe produced an 81 per cent jump in trading profits to €71.3 million (after goodwill amortisation of €8.7 million) on sales 39.2 per cent ahead at €926.2 million. At the materials division - which has operations in Spain, Poland and Finland, including for the first time the Finnsementii/Lohja acquisition - results were strong.
Profits increased at the distribution businesses in the Netherlands, France and Portugal while the concrete products' division benefited from the inclusion of acquisitions and from a better performance in France, which offset lower profits from the Dutch operations.
In the Americas - North and South and Canada - trading profits were 43.6 per cent ahead at €97.8 million (after goodwill amortisation of €6.5 million) on sales which were 46.4 per cent up at €2,060 million. CRH described the markets as "robust" but with some weakness in private construction and unusual wet weather in the north-east which depressed volumes.
It reported strong profits growth at Oldcastle and Precast and at the Glass and Architectural Products Group.
But, in South America, lower economic activity depressed profits at Canteras Cerro Negro.
Group first-half goodwill amortisation rose to €17.7 million from €4.1 million, reflecting strong acquisition activity.
