Construction giant suffers shares slump
Irish building materials group CRH saw its shares drop more than 6% after giving a downbeat outlook about its prospects in the second half of the year.
The company, which owns Northstone, Farrans and Tyrone Brick in Northern Ireland, said that concerns about the eurozone's debt had added to uncertainty about the pace of economic progress in Europe, while the US's recovery seemed to be slowing.
"We continue to expect ongoing improvements in the cumulative rate of like-for-like sales decline through the second half, although the full year decline is now likely to be somewhat greater than previously anticipated," the company said in a stock market filing.
Its share prices slumped by 6% to close at €16.08 after the interim statement was released.
The building firm, which is the largest company on the Irish stock market, said it expected underlying sales for the first half to show a 10% drop compared with the same period last year, better than the 14% forecast at its annual meeting in May.
Against this backdrop it now expects that earnings before interest, tax, depreciation and amortisation for the seasonally less profitable first half of the year will show a decline of approximately 20% from the €650m registered in the same period a year ago. The company said that in terms of profit before tax it expected to almost break even for the first half of this year, as a sales drop eased.
The update showed that in the first half of 2010, CRH completed 13 acquisitions at a cost of €133m in the US and Europe, and is investing a further €19m in Yatai Cement as its 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 focused on delivering strong cash performance from our existing businesses." The company, which derives half its earnings from the US, said its Americas operations experienced an overall sales decline of 10% for the first half of the year, compared with a cumulative decline of 14% for the four months to end April.
Following a difficult start to the year which was adversely affected by harsh weather conditions, the decline in underlying sales for its Europe Materials operations moderated significantly in the second quarter, bringing the decline for the first half to around10%. CRH added that construction activity in Ireland continues to run well below 2009 levels.