8-K

CRH PUBLIC LTD CO 8-K Report (Nov 12, 2008)

Filed November 12, 2008For Securities:CRH

Summary

CRH Public Limited Company (CRH) has issued an Interim Management Statement on November 11, 2008, updating its full-year profit expectations amidst an increasingly cautious global business climate, largely driven by unprecedented financial market events. The company now anticipates a full-year profit before tax decline in the low to mid-teens, a slightly wider range than previously expected. This revision is primarily due to weaker-than-anticipated trading in several European markets, particularly in the Europe Products and Europe Distribution segments, where significant cost restructuring and capacity cuts have become necessary. Despite these challenges, CRH's American operations have performed broadly in line with expectations, benefiting from a strengthening US dollar. The company's financial position remains robust, with strong cash flow generation and efforts to maintain financial flexibility, including completing the renewal and extension of bank facilities. While development activity is being tempered by the challenging trading backdrop, CRH remains focused on operational delivery and prudent capital allocation. The company plans to release its full-year 2008 trading update on January 6, 2009.

Key Highlights

  • 1Full-year profit before tax expected to decline in the low to mid-teens, a revision from earlier forecasts.
  • 2Weakening trading patterns intensified in Europe, particularly in Europe Products (expecting ~25% operating profit decline) and Europe Distribution (expecting mid to high single-digit decline).
  • 3European Materials segment expects only modest profit progress in H2, with full-year operating profit anticipated to show a high single-digit percentage increase.
  • 4American operations have performed broadly as anticipated, aided by a stronger US dollar, although Americas Materials and Americas Products segments are expected to see mid-teen and ~20% operating profit declines, respectively.
  • 5Americas Distribution segment is exceeding expectations with an anticipated ~30% operating profit increase.
  • 6CRH has terminated its share repurchase program, having bought back 3.3% of shares, to maintain maximum financial flexibility.
  • 7Full-year capital expenditure is expected to be maintained at 2007 levels (euro 1 billion), with 2009 capital expenditure planned to be lower than depreciation.

Frequently Asked Questions

CRH now expects a full-year percentage decline in profit before tax in the low to mid-teens. This is a slight downward revision from their previous expectation of a decline broadly similar to the 10% reported for the first half of the year.

European markets have experienced weaker-than-anticipated trading, particularly in recent months, leading to revised profit expectations for Europe Products and Europe Distribution. In contrast, American operations have performed broadly in line with expectations, with the strengthening US dollar providing a favorable translation benefit.

To maintain maximum financial flexibility in light of stressed financial markets, CRH has terminated its share repurchase program. They are also focusing on strong cash flow generation and have completed the renewal and extension of significant bank facilities, positioning the Group well in terms of debt maturity.

CRH expects its capital expenditure for 2008 to remain at the 2007 level of approximately euro 1 billion. For 2009, capital expenditure is projected to be lower than depreciation, approximately euro 750 million based on current exchange rates, reflecting a reduced demand environment.