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CRH reports 2010 financial results

World Cement,

CRH plc has reported its financial results for the calendar year 2010. The following is excerpts from the release pertaining to these results. The full report can be found here.


Sales revenue for 2010 was broadly in line with 2009 at €17.2 billion; on a like-for-like basis, excluding the impact of acquisitions and translation, sales declined by 7%.

EBITDA for the year, after once-off charges of €100 million (2009: €205 million) associated with the Group’s cost reduction programme, declined by 10% to €1615 million, and was in line with the guidance provided in the trading update of 9 November 2010.

Depreciation and amortisation charges amounted to €917 million (2009: €848 million) including impairment charges of €102 million (2009: €41 million) relating to subsidiaries and joint ventures. In addition, impairment charges of €22 million relating to associates are included in the Group's reported €28 million share of associates' profit after tax, bringing total impairment charges to €124 million (compared with guidance of €100 million in November update).

Operating profit decreased 27% to €698 million. Profit before tax and impairment charges declined 15% to €658 million (2009: €773 million), and compares with the guidance of €620 to €650 million provided in the November update. After impairment charges, profit before tax of €534 million represents a decline of 27% compared with 2009 (guidance in November update was €520 to €550 million). Earnings per share decreased by 31% to 61.3c (2009: 88.3c).

The results include the proportionate consolidation of joint ventures in the Group’s income statement, cash flow statement and balance sheet while the Group’s share of associates’ profit after tax is included as a single line item in arriving at Group profit before tax.

Operating cash flow, after dividends and before scrip dividend-related share issues, amounted to €665 million, and reflects both strong working capital inflows and continuing restraint by the Group on capital expenditure.

Year-end net debt of €3.5 billion was lower than 2009 (€3.7 billion) despite expenditure during 2010 of over €1 billion on acquisitions and capital expenditure projects. With 2010 EBITDA/net interest cover at 6.5 times, and year-end net debt/EBITDA cover at 2.2 times, CRH continues to have one of the strongest balance sheets in the sector.


Total acquisition spend for 2010 was €567 million (2009: €458 million), which included 28 traditional bolt-on acquisitions contributing incremental annualised sales of €0.8 billion, of which approximately €0.2 billion has been reflected in our 2010 results. First half expenditure of €159 million included 13 acquisitions across the Materials segments of the Group’s businesses in Europe and the United States, and a further investment in northeastern China where associate, Yatai Building Materials, continued to expand its position.

The second half of the year saw a welcome pick-up in the pace of development activity with total expenditure of €408 million. This included a series of nine further bolt-on acquisitions by the Americas Materials business, extending the Group’s geographic reach; in total in 2010, acquisitions by this Division added a total of 579 million t of well-located aggregates reserves across the United States. In Europe in the second half of the year, CRH added to its materials footprint in Switzerland, and, with the buyout of an additional 50% of its Bauking joint venture, the Group substantially expanded its presence in the attractive German distribution market.

Cost Reduction Programme

The ongoing cost reduction programme commenced by the Group in 2007 to mitigate the impact of the continuing difficult market conditions has been reviewed and extended during 2010 as it instigated further initiatives to improve efficiency. The Group’s estimate of cumulative annualised savings over the five years 2007 to 2011 is now €2 billion, of which €0.5 billion has been realised in 2010.

The total cost of implementing these initiatives is estimated at €403 million, of which €367 million has been spent to date (€100 million in 2010, €205 million in 2009 and €62 million in 2008).


The rate of decline in like-for-like Group revenues moderated progressively through the second half of 2010 with third and fourth quarter falls of 4% and 2% respectively. Revenues to date in 2011 show a good improvement on 2010, although being early in the year these trends must be regarded with caution, particularly against the background of the very severe weather conditions experienced in early 2010.

In Europe, the outlook for markets in Ireland and the Iberian Peninsula remains extremely challenging. However, the Group expects good 2011 demand growth in Finland, Poland, Germany, Switzerland and Austria, with the outlook being somewhat flatter in the UK, Benelux and France. In the United States, there is continuing evidence that new residential construction activity has bottomed. Recent non-residential indicators suggest a return to growth in 2012; meanwhile CRH expects to see further, though moderating, declines in this sector in 2011. The Group expects that the current US federal budgetary deadlock will be resolved over coming weeks, providing more certainty regarding highway funding levels for 2011. Against this background, CRH expects that volumes in its public infrastructure end-use markets are likely to be slightly down in 2011. Its interests in China and Turkey should see further progress in 2011, while cement pricing in India is likely to remain challenging.

Overall demand across the Group appears to have stabilised in the past three months and, assuming no major market dislocations, CRH believes that it is reasonable to look forward to like-for-like revenue growth for 2011 as a whole. The level of price progress achieved in 2011 will be key to revenue growth and to the recovery of higher input costs. Acquisitions completed over the last eight months are expected to add to the Group’s performance in 2011 and with a strong balance sheet it has the capacity, where it sees value, to capitalise on a growing pipeline of opportunities. With significant adjustments to the Group’s cost and operational base over the past three difficult years, it looks to a year of progress in 2011 and to stronger upward momentum thereafter.

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