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US growth helps boost profit of Ireland's biggest company

By John Mulligan

Ireland's biggest firm CRH is on track to deliver more profits than anticipated next year as its operations in North America fuel growth, according to Davy Stockbrokers.

The Irish building materials giant owns Belfast's Northstone.

Analysts reckon that an improvement in CRH's key Americas materials unit has "far from run its course".

Davy believes that CRH, which is headed by chief executive Albert Manifold, will post earnings before interest, tax, depreciation and amortisation (EBITDA) of just over €3.1bn (£2.65bn) in the current year, and slightly more than €3.3bn (£2.8bn) in 2017.

The 2016 figure is 2.5% more than Davy had previously expected CRH to generate.

CRH flagged last month that its first-half earnings this year would be about €1.1bn (£940m) compared to the €1bn (£850m) it said last April that it expected to post.

Davy Stockbrokers said its projected figure for 2016 at CRH includes that additional €100m (£85m) guidance, minus a negative sterling adjustment and a more cautious view on the group's UK operations.

The broker said that CRH's improved guidance for the first half was probably driven by a continuation of favourable volume, price and cost dynamics, particularly in the Americas.

Davy pointed out that CRH's peers experienced weaker volumes in April and May due mainly to poor weather in Texas, where CRH's materials division has a relatively small exposure.

Peers in products and distribution in the Americas have raised their own full-year expectations, while in Europe, second quarter updates from construction companies have been generally positive, Davy noted.

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