Slowdown threatens US jobs despite 18% rise in CRH profits

Jobs could be lost in CRH's American operations as the US economy continues to slow, the company's executives acknowledged yesterday.

The building materials group said yesterday that operating profits grew 18 per cent to €2 billion in 2007 from €1.77 billion the previous year.

A strong performance in Europe, organic growth and contributions from acquisitions all helped drive the increase.

Chief executive, Liam O'Mahony, said yesterday that there "could be a few thousand" job losses in its American operations between 2007 and 2008, particularly if the US slowdown continues to bite.

The group employs about 40,000 people in its various US businesses.

Mr O'Mahony pointed out that any job losses are a result of decisions made by local managers in response to individual market decisions. "It's an evolving story," he said.

Finance director, Myles Lee, said that cost cutting measures in the US last year meant that jobs were lost in some of its businesses.

"There are more being implemented in 2008 and we would have contingency plans in place in the event of a further softening of the US economy," he added.

CRH's businesses are divided roughly half and half between Europe and the US.

The group's European operating profits grew €292 million to €1.1 billion in 2007, an increase of 36 per cent.

Of that €292 million, €178 million was organic growth - expansion in its existing operations - while the balance came from companies that it bought during the period.

Its US divisions delivered €27 million growth in operating profits during 2007 to €980 million, an increase of 3 per cent. The weak dollar hit profits from the US and cost it €78 million.

But Mr O'Mahony said that this was purely a "translation cost" as the group has not moved the cash from the US to Europe.

CRH sold a number of assets during the year, including parts of the APAC asphalt business that it bought for a record €1.1 billion during 2006. Profits from these sales were €57 million, compared with €40 million the previous year.

Including the €57 million from the asset sales, trading profit came in at €2.143 billion. Financing its activities cost the group €303 million and associated businesses contributed €64 million.

CRH ended the year with pre-tax profit of €1.9 billion, a 19 per cent increase in the €1.6 billion it delivered last year. Earnings per share grew 17 per cent in 2007 to 262.7 cent from 224.3 cent.

The company is proposing to pay shareholders a full year dividend of 68 cent per share, a 31 per cent increase on last year

Overall sales were up 12 per cent in 2007 at €21 billion from €18.7 billion the previous year.

CRH expects to make further progress in Europe this year, although it acknowledged that organic growth will be slower than last year.

Ireland and Spain are slowing but there is strong growth in eastern Europe, particularly Poland and the Ukraine.