INTERNATIONAL BUILDING materials group CRH warned yesterday that this year’s earnings would fall 10 per cent short of 2009 as an anticipated recovery in the US has failed to materialise.
The news startled investors who pushed the company’s stock down 16 per cent in Dublin.
The company published figures showing that pretax profits were down 77 per cent at €25 million in the six months to June 30th from €108 million during the same period last year.
Earnings before interest, tax and write-offs of depreciation costs and amortisation (Ebitda), a measure of the cash the group generates, shrank 20 per cent to €520 million.
A CRH trading statement published last July anticipated this fall in earnings, but it also predicted that Ebidta in the second half of the year would recover and overtake 2009 levels.
However, the group warned yesterday that earnings would fall short of the €1.15 billion recorded in the second half of 2009, and that overall Ebidta would be 10 per cent behind last year’s €1.8 billion total, meaning it expects the figure to be closer to €1.62 billion.
The company blamed poorer-than-expected sales and prices in its Americas materials division, which accounts for 20 per cent of revenues.
This division had operating losses of €63 million in the first half of the year, while earnings fell 44 per cent to €75 million.
In its statement, CRH said that, through July and August, the months which kick-start its main earnings season, it had seen weaker-than-expected prices and sales volumes in its Americas materials division.
“As a result, second-half US dollar profitability in Americas materials will be slower than last year compared with our previous estimate of an improved second-half out-turn,” it warned.
There are also delays in publicly funded building projects, which form part of the federal government’s recovery programme on which CRH had been partially depending to support sales and profits.
The group said yesterday that projects which were due to begin this year have been “pushed out” to 2011.
Analysts yesterday described the results as “disappointing”, while investors sold the stock heavily.
Its price fell 16.6 per cent in Dublin, closing at €11.70 after opening at €14.025 in the morning.
Around 6.2 million of its shares changed hands during the day.
Figures from the US showing that house sales fell 27 per cent to 3.8 million units in August, the lowest level since May 1995, also hit sentiment towards CRH.
The company’s international peers, which include Paris-listed St Gobain and Lafarge as well as Frankfurt-quoted Heidelberg, suffered as investors fled construction-related stocks.
CRH said revenue dipped 8 per cent in the first half of the year to €7.66 billion from €8.3 billion during the same period in 2009.
Operating profit halved to €118 million in the six-month period from €241 million in the first half of 2009.
Chief executive Myles Lee pointed out that the company’s pretax profits were slightly ahead of what was predicted in last July’s statement.
That prediction also forecast the 50 per cent drop in its operating surplus.
