CRH reported Tuesday a pretax profit of Euro383m for the six months ended June 30, up 20 per cent from Euro 319 million in the same period a year ago. The result came in above analysts expectations for a pretax profit of Euro376m in the first half of 2005. Chief Executive Liam O’Mahony said the group "had a strong first half profit outcome with good organic growth from the Americas significantly outweighing a decline in Europe, and a satisfactory incremental contribution from 2004 and 2005 acquisitions. The Group will continue to benefit in the second half from strong markets in its American operations and from a sustained focus on input cost recovery and operational performance.
"Although this will be offset to some extent by the recent surge in energy costs we nevertheless expect to make further progress in the more important second half of the year," O’Mahony said in a statement.
Turning to the outlook, in Europe Materials, demand in the Irish market remains strong while recent months have seen improved trading in Poland. In Switzerland, second half cement demand is likely to be lower as the major tunnel project winds down. Trading patterns in other markets are expected to show little change and overall the Division expects to deliver an improvement in underlying second half operating profit.
The short term economic outlook for Europe Products remains generally subdued in our core countries. As a result it is unlikely that the profit decline experienced in the first half of the year can be offset in the second half and full year operating profit is expected to be lower than in 2004, CRH said in a statement.
CRH’s Americas Materials operations are performing well and have good backlogs in hand for the remaining months of the year. "While recent higher energy costs are absorbing more of the benefits of achieved price improvements than in the first half, we currently expect some overall margin increase and higher full year profit in US$ terms," CRH said.
Although the pace of advance for Americas Products has moderated slightly over the summer months the demand backdrop remains broadly positive with continuing strong housing demand and ongoing recovery in our non-residential markets.
In Ireland, growth in residential construction and continuing recovery in commercial and industrial construction resulted in good overall volume increases. However, phased price increases were not sufficient to fully recover higher first half input costs and overall profit on the island was slightly below 2004 levels.
CRH said its activities in Finland and the Baltic states "recovered well from a poor first quarter to leave first half cement and concrete volumes in line with 2004 levels and profit largely unchanged. Polish construction activity was particularly strong in the first half of last year due to accelerated demand ahead of the 1st May 2004 increase in VAT on construction products which coincided with EU entry.
"In the first half of this year, our Polish operations were affected by late winter weather and, with cement volumes 17% lower than in 2004, profit declined. Sales volumes and profits in our Ukrainian cement operation were in line with 2004 levels," CRH said.
In Switzerland, the final phase of concreting works on the major Loetschberg tunnel project resulted in further good volume increases for our cement operations.
However, demand for concrete products and aggregates was impacted by poor early weather and overall profit was lower in a competitive marketplace.
In Iberia, CRH’s Spanish operations enjoyed very busy first half trading conditions and with improvements in volumes and prices reported higher profit. Secil, the Portuguese cement, concrete products and aggregates producer, in which CRH acquired a 49 per cent stake in June 2004, had a positive start to the year and accounted for almost all of the incremental impact of 2004 acquisitions shown in the table above. Overall, operating profit improved reflecting a full first half share of profit from Secil.
