8-K

CRH PUBLIC LTD CO 8-K Report (Jul 7, 2009)

Filed July 7, 2009For Securities:CRH

Summary

CRH plc, a global building materials group, issued a trading statement for the first six months of 2009, highlighting the severe impact of the global recession on its operations. The company anticipates a significant decline in profitability, with EBITDA expected to fall by approximately 40% and operating profit by roughly two-thirds compared to the first half of 2008. Profit before tax is projected to be around €0.1 billion, impacted by €75 million in restructuring costs and adverse currency translations. Despite these challenges, CRH is aggressively implementing cost-saving measures, aiming for cumulative annualised savings of €1.45 billion by the end of 2010, adding to previously announced initiatives. The company's financial position remains strong, supported by a March 2009 rights issue, providing ample financing capacity for strategic development opportunities. While trading conditions are expected to remain difficult, CRH sees some positive signs for the second half of the year, including benefits from cost reductions, more moderate energy costs, and an anticipated increase in US infrastructure spending due to stimulus measures. The outlook suggests that the rate of profit decline will moderate in the second half compared to the first, with a continued focus on cost control and cash generation.

Key Highlights

  • 1CRH anticipates a significant decline in EBITDA (approx. 40%) and operating profit (approx. one-third of prior year) for H1 2009 due to the global recession.
  • 2Profit before tax is projected at €0.1 billion, including €75 million in restructuring costs and €20 million in adverse currency translation impacts.
  • 3The company is intensifying cost-saving measures, aiming for cumulative annualised gross savings of €1.45 billion by end-2010, an increase of €555 million from previous targets.
  • 4Operating cash outflow for H1 2009 is expected to be in line with H1 2008, managed through tight capital expenditure control and lower working capital outflow.
  • 5CRH maintains strong financing capacity, bolstered by a March 2009 rights issue, positioning it to pursue strategic development opportunities.
  • 6Positive signs for H2 2009 include benefits from cost reductions, moderating energy costs, and improving US infrastructure spending from stimulus packages.
  • 7While second-half profitability will be lower than in 2008, the rate of decline is expected to improve compared to the first half of 2009.

Frequently Asked Questions

The primary reason is the severe global recessionary environment, which has led to weaker than anticipated trading across CRH's major markets, particularly in Europe and the Americas.

CRH is implementing new measures to deliver an additional €555 million in annualised gross savings in 2009 and 2010. Combined with previous initiatives, this brings the total expected annualised savings over the 2007-2010 period to €1.45 billion. These savings are crucial for mitigating the impact of the difficult trading environment.

CRH is maintaining tight control over capital expenditure and achieving a lower seasonal working capital outflow, aiming to keep operating cash outflow in line with the previous year. The company also highlights its significant financing capacity, strengthened by a March 2009 rights issue, which positions it well for future development.

While overall trading conditions are expected to remain challenging, CRH anticipates a moderation in the rate of profit decline in the second half compared to the first half. This improvement is expected due to benefits from cost reduction measures, more moderate energy costs, and an anticipated increase in infrastructure spending in the United States and some European markets.