Interim trading statement: key points
- The cumulative rate of like-for-like sales decline continues to ease as we move through 2010. By end-June, the year to date decline had reduced to approximately 10% compared with the 14% decline to end April reported in our AGM updating statement in early May. Against this backdrop CRH now expects that EBITDA for the seasonally less profitable first half of the year will show a decline of approximately 20% (H1 2009: €0.65 billion).
- Operating profit for the six months to June is expected to be approximately half of last year's outcome (H1 2009: €0.24 billion), a greater decline than at EBITDA level due to the fact that depreciation and amortisation charges are more equally balanced than EBITDA between the first and second halves.
- First-half profit before tax is expected to be close to breakeven (H1 2009: €0.1 billion) after restructuring costs of approximately €30 million (H1 2009: €74 million).
- Operating cash outflow for the half year is expected to be higher than 2009 but in line with 2008.
- In the first half of 2010, the Group completed 13 acquisitions at a total cost of €133 million across the Materials segments in the US and Europe, and is investing a further €19 million in Yatai Cement as CRH's share of equity funding for two development projects in northeastern China. CRH remains very well positioned to deliver a healthy transaction flow as trading visibility improves. In the meantime we remain focussed on delivering strong cash performance from our existing businesses.
- In addition to its normal capital expenditure programme, during the first half of 2010 the Group has initiated three capital projects involving total expenditure of €84 million over a three year period, with the aim of enhancing the efficiency of our cement operations in Poland and India and expanding aggregates capacity in the United States.
- With the benefits from cost reduction initiatives, lower restructuring costs (€131 million in the second half of 2009) and the favourable translation impact of the weaker euro, we expect that EBITDA in the seasonally more important second half of the year will be ahead of last year (H2 2009: €1.15 billion).
Development strategy update
CRH announces first half 2010 acquisition and development initiatives totalling €236 million
Commenting on the acquisitions and investments, Myles Lee, CRH Chief Executive, said:
“The 14 acquisition and investment transactions announced today fit very well into our strategy of focussing on value-adding investments in our existing markets. We are seeing a good flow of bolt-on opportunities across our businesses and we continue to monitor wider developments in our industry; however, we are maintaining a patient approach in progressing transactions in light of the challenging market backdrop. CRH is very well positioned to deliver a healthy transaction flow as trading visibility improves. Meanwhile, the disposal process for our Insulation and Climate Control businesses in Europe, which we announced earlier this year, is advancing well”.
The development initiatives contained in this Update are as follows:
- Europe Materials (€74 million): four acquisitions (€20 million), an equity investment (€19 million) and two capital projects (€35 million)
We acquired a cement import terminal in Wales and added to our ready-mixed concrete activities in the Netherlands. In Portugal, our Secil joint venture acquired a northern-based quarry business. Our joint venture partner in India expanded its downstream activities with the acquisition of a ready-mixed concrete business. In China, Yatai Cement, in which CRH has a 26% associate interest, has commenced two projects to expand its clinker and cement production capacity.
The two capital projects commenced during the period comprise the installation of an alternative fuel feeding system in our Polish cement operations, and the construction by our joint venture in India of a captive power plant adjacent to its cement plant.
- Americas Materials (€162 million / US$ 208 million): nine acquisitions (US$ 142 million) and one capital project (US$ 66 million)
A total of nine bolt-on acquisitions were completed, adding permitted aggregates reserves of 243 million t and geographically expanding a number of our existing businesses.
The Division commenced development of a 263 million t quarry in Georgia, which will increase the scale of our aggregates operations in the southeast region.
Further details can be found on the company’s website.
Read the article online at: https://www.worldcement.com/europe-cis/07072010/crh_issues_interim_trading_statement_and_development_strategy_update/