CRH has reported its full year results for 2013, which show sales of €18 billion, down 2% on a like-for-like basis. This reflects a slow first half (down 6%) and an improved second half (up 2%). EBITDA came in at €1475 million overall, a decrease of 19% from 2012. Sales increased in America, but decreased in Europe.
In 2013, CRH made acquisitions and investments of €720 million. The Group has completed its initial phase of ongoing portfolio review and has identified a total of 45 business units that will not meet its return objectives. These businesses amount to ~10% of the Group’s net assets at year-end 2013; a disposal process is underway. The next phase of the review has begun and has identified further businesses that require more detailed assessments.
Acquisitions and developments
Total acquisition and investment activity for 2013 amounted to €720 million on a total of 28 bolt-on transactions that will contribute annualised sales of approximately €424 million, of which €306 million has been reflected in the 2013 results.
Seven transactions were completed by the Europe Materials operations, including the acquisition of Cementos Lemona in Spain as part of an asset swap in which CRH divested its 26% stake in Corporacion Uniland. In September the Group became the leading cement producer in Ukraine with the acquisition if Mykolaiv Cement in the Lviv region. The joint venture business in India also strengthened its market position in Southern India with the acquisition of Sree Jayajothi Cement in August.
Overview of results
Poor weather in the first half of 2013 impacted results in the major markets. The second half saw the beginnings of stabilisation in Europe, which bodes well for 2014. In the US, improved economic activity brought EBITDA ahead of 2012 levels in the second half. In all, the Group reported a net loss before tax of €215 million compared to profit of €646 million in 2012.
In Europe, like-for-like sales dropped 16% in the first half of 2013, while activity and profits in the second half were almost in line with 2012. Over the year, like-for-like sales fell 8%. This decline was partially offset by cost reduction and efficiency measures, resulting in an overall EBITDA margin excluding pensions/CO2 gains of 11.5% compared with 12.2% in 2012.
Construction spending was positive in Switzerland and CRH’s cement volumes in the country were 12% higher than in 2012 though sales prices saw some slippage. Operating profit was ahead of 2012. Reduced construction activity in Finland led to reduced volumes there and operating profit was down on 2012. Poland had a difficult first half that could not be overcome by a pick-up in construction activity in the second half. The result was an estimated 9% decline in national cement volumes. CRH’s cement volumes improved by 8% y/y in the second half, bringing the full-year decline in cement volumes to 11%. With prices under pressure, operating profit was below 2012. The situation in Ukraine is creating uncertainty going forward, but the second half of the year saw strong cement demand after a weather-hit first half, bringing CRH’s volumes almost in line with 2012 with broadly similar operating profit. The Group experienced lower volumes and lower operating profits in the Benelux due to reduced construction activity. Ireland’s cement volumes were about on par with 2012, while Spain’s construction activity fell by a further 23%, though cost reduction efforts put like-for-like results in line with 2012.
Adverse weather conditions continued to impact operations through to the early weeks of August, after which trading conditions improved, bringing second half EBITDA ahead of 2H12. Like-for-like sales revenue was down 3% y/y, but contributions from acquisitions resulted in overall US$ EBITDA for the year being 4% ahead on 2012. The eastern region outperformed the west.
Cost reduction programme
The Group continued to focus on improving its cost base in 2013, particularly in Europe. Incremental savings of €195 million were delivered in the year. An extension of the cost reduction programme targeting additional savings of €450 million over the period 2012 – 2015 announced in November 2012 has been adjusted upwards to €535 million. This will bring cumulative annualised savings to €2.6 billion by the end of 2015, of which some €2.4 billion has been achieved by the end of 2013.
Chief Executive Albert Manifold said: “We believe that 2013 represents the trough in our profits and that 2014 will be a year of profit growth. We are encouraged by second-half activity levels in 2013 and by the fact that, while it is still early in the season, trading so far in 2014 has been ahead of last year”.
Looking at specific markets, the Group anticipates another year of progress in the Americas, subdued construction activity in the Dutch economy, solid activity in Switzerland, a positive year for Germany, modest growth in Ireland, a flat year for Finland and challenging markets in both France and Spain. Ukraine’s future is unclear, while Poland is expected to see improved construction activity.
Adapted from press release by Katherine Guenioui
Read the article online at: https://www.worldcement.com/europe-cis/25022014/crh_reports_full_year_2013_results_807/