8-K

CRH PUBLIC LTD CO 8-K Report (Sep 2, 2003)

Filed September 2, 2003For Securities:CRH

Summary

CRH Public Limited Company's 8-K filing on September 2, 2003, presents its interim results for the six months ended June 30, 2003. The report indicates a decrease in sales by 3% to EUR 4,661 million and a more significant 17% drop in operating profit to EUR 245 million. This decline is attributed to challenging trading conditions in Mainland Europe and the Americas, exacerbated by currency headwinds, particularly the strengthening Euro against the US Dollar, and adverse weather in North America. Despite these challenges, the company announced a 10% increase in its interim dividend, marking the 20th consecutive year of dividend growth, and highlighted a robust acquisition pipeline with significant planned investments. The outlook suggests that full-year profit before tax, excluding adverse currency translation effects (projected at EUR 77 million), is expected to be ahead of the previous year, contingent on favorable weather conditions in the remaining months. The company continues to focus on cash generation, cost control, and efficiency improvements, underpinning its financial capacity for strategic acquisitions, including the announced substantial deal for Cementbouw's operations in Holland.

Key Highlights

  • 1Sales for H1 2003 decreased by 3% to EUR 4,661 million, while operating profit fell by 17% to EUR 245 million.
  • 2Adverse currency translation effects, primarily the strong Euro against the US Dollar and Sterling, negatively impacted reported profits.
  • 3Challenging weather conditions in North America (Northeast and Midwest) led to a higher operating loss in the Americas Materials division and impacted the Products & Distribution segment.
  • 4Despite overall profit declines, CRH increased its interim dividend by 10% to 8.20c per share, marking the 20th consecutive year of dividend growth.
  • 5Significant acquisition activity is planned, with EUR 577 million spent in H1 2003 and major agreements to acquire Cementbouw's operations in Holland for EUR 646 million.
  • 6Full-year profit before tax, excluding adverse currency impacts, is projected to be ahead of the prior year, assuming reasonable weather.

Frequently Asked Questions

The profit decline was primarily driven by challenging trading conditions in Mainland Europe, particularly in Poland and Finland due to a cold first quarter, and in the Americas due to adverse weather in the US and a weaker US dollar. Currency translation effects, with a stronger Euro against the US Dollar and Sterling, also had a significant negative impact on reported profits.

CRH is experiencing significant adverse currency translation effects, primarily from a stronger Euro against the US Dollar and Sterling. While these headwinds are expected to impact full-year results, the company is focused on cash generation, cost control, and efficiency improvements to mitigate these effects. The company also highlighted that these measures are unlikely to fully offset the adverse currency impact.

The company expects full-year profit before tax, excluding adverse currency translation effects (estimated at EUR 77 million), to be ahead of last year. This outlook is contingent on reasonable weather conditions for the remainder of 2003. While the Irish market is expected to see lower overall activity due to infrastructure project completions, and the UK market has softened slightly, CRH anticipates recovery and growth in Mainland Europe and continued strong performance in the Americas, subject to weather.

CRH has a strong financial capacity for acquisitions. In the first half of 2003, the company invested EUR 577 million across 20 deals. Notably, CRH announced agreements to acquire Cementbouw's distribution and building products operations in Holland for EUR 646 million and to invest EUR 47 million in Cementbouw's materials operations. These transactions are expected to close by the end of the year, subject to regulatory approvals.