CRH plc achieved higher sales and reduced debt in 1H14 compared with 1H13. The results show an encouraging start to the year, disrupted slightly by the impact of severe weather conditions in the US. Reported sales revenue for the period was €8.3 billion, 4% up on 1H13. On a like-for-like basis, sales were up 5% y/y, with a 6% increase in Europe and a 4% rise in the Americas. EBITDA rose 27% to €505 million. After depreciation and amortisation charges of €334 million (compared to €356 million in 1H13), first-half operating profit reached €171 million, up from €41 million in 1H13. First-half profit after tax was €61 million compared with a €71 million loss in 1H13.
Acquisitions and divestments
The group reports total acquisition/investment activity of €130 million on a total of 11 transactions in the period from January – June. No mention is made of media reports regarding the possible divestment of the group’s Turkish JV with Eren Holdings, except to say that the portfolio review is progressing well. ‘An orderly, multi-year divestment programme, amounting to c. €1.5 billion to €2 billion, is underway for businesses which no longer meet our returns and growth criteria, or for which we believe CRH is no longer the best long-term owner,’ the company says in the interim results statement.
Sales up in Europe and the Americas
In Europe, mild winter weather contributed to increased sales and operating profit. Poland saw significantly higher cement volumes and achieved an increased overall margin and operating profit despite a 2% fall in cement prices. Cement volumes in Ukraine were up 20% and operating profit was likewise ahead, due in part to the acquisition of Mykolaiv Cement from Lafarge in September 2013. CRH reports that political unrest has less of an impact in the west of the country compared to the east, but it remains a concern.
Volumes also grew in Switzerland and in Belgium, while construction activity continued to fall in Spain and grew only slowly in Ireland.
Volumes increased in the Americas Materials’ markets, despite the severe weather conditions in 1Q14. Like-for-like US$ sales revenue increased 4%, while EBITDA in US$ was 26% higher.
Cost reduction programme
CRH’s cost reduction/profit improvement programme continues to deliver results, achieving incremental savings of €45 million in 1H14. The group reports it is on track for €100 million savings in 2014 and a further €75 million in 2015, bringing cumulative savings to €2.6 billion by the end of next year.
Net debt at the end of June was €0.5 billion lower than at the end of the first half of 2013 at €3.7 billion.
CRH expects second half performance in Europe to be broadly in line with 2013, while in the Americas second half performance is anticipated to be ahead of 2H13. EBITDA is expected to be somewhat ahead of 2013 in the second half, assuming normal weather patterns and no major market dislocations.
Adapted from press release by Katherine Guenioui
Read the article online at: https://www.worldcement.com/europe-cis/19082014/crh-reports-on-positive-1h14-317/