CRH shares fall on Credit Suisse report

CRH shares fell in Dublin trading after analysts at Credit Suisse Group AG cut their price target on the stock and advised clients…

CRH shares fell in Dublin trading after analysts at Credit Suisse Group AG cut their price target on the stock and advised clients not to invest in European building materials companies for at least the next year.

CRH, the world's second-largest maker and distributor of building materials, fell as much as 8.7 per cent in early trade. By 1.30pm the shares had rebounded somewhat to 6.7 per cent to €17.44.

CRH will issue a statement on sales and market conditions tomorrow morning.

Credit Suisse analysts including Arnaud Lehmann in London reduced their target on the Dublin-based company to €22 from €28 in a note to investors today.

The building materials industry is heading for a downturn that will last two years on slowing construction markets in Europe and North America, which account for more than 40 percent of global cement producers' earnings.

A decline that started with home construction will spread to house renovation, non- residential building and infrastructure spending, they said.

"We continue to see material downside risks in these regions in the coming years, with declining volumes, a weaker pricing environment, rising production costs and margin pressure in many markets,'' the analysts said.

There are "no reasons to be exposed on the long side for the next 12 months."

The analysts also cut their share price targets on Lafarge SA, the world's biggest cement maker, to €85 from €95 and rival Cie. de Saint-Gobain SA to €45 from €55.

Lafarge and Saint-Gobain both declined as much as 5 per cent, while Holcim
decreased 3.2 per cent. UK construction products suppliers Wolseley and SIG also dropped.

CRH said last month meeting its goal for increased profit this year will be "more challenging" on a weaker dollar and deteriorating markets in North America and Europe.

Bloomberg