8-K

CRH PUBLIC LTD CO 8-K Report (Nov 9, 2010)

Filed November 9, 2010For Securities:CRH

Summary

CRH plc, an international building materials group, released an Interim Management Statement on November 9, 2010, providing an update on its third-quarter trading and outlook for the full year 2010. The company reported a moderation in the rate of decline for Group sales, with like-for-like third-quarter sales down 4% year-on-year. This trend, combined with ongoing cost reduction measures, led to an easing in the rate of profit decline. EBITDA for the third quarter stood at €0.7 billion, and net debt was reduced by €0.8 billion to €4 billion as of September 30, 2010, due to strong operating cash flows. Looking ahead, CRH anticipates full-year EBITDA of approximately €1.6 billion, slightly down from €1.8 billion in 2009, in line with previous guidance. The company expects the decline in like-for-like sales to continue to moderate in the final quarter. Despite increased costs associated with cost reduction plans, CRH continues to focus on value-adding acquisitions, having completed seven transactions year-to-date and announcing an agreement to increase its stake in the German distribution business, Bauking. The company provided segment-specific updates, noting varied performance across Europe and the Americas, with some areas showing sales moderation and others still facing volume declines and pricing pressures.

Key Highlights

  • 1Group like-for-like sales decline moderated to 4% in Q3 2010, an improvement from the 10% decline in the first half.
  • 2Group EBITDA for Q3 2010 was €0.7 billion, and cumulative EBITDA for the nine months to September 30, 2010, was €1.2 billion.
  • 3Net debt was reduced by €0.8 billion in Q3 2010, ending the quarter at €4 billion.
  • 4Full-year 2010 EBITDA is projected to be approximately €1.6 billion, compared to €1.8 billion in 2009.
  • 5CRH continues to pursue acquisitions, completing seven transactions year-to-date and agreeing to acquire an additional 50% of Bauking.
  • 6Cost reduction programs are being extended, with estimated gross savings for 2010/2011 revised upwards to €455 million.
  • 7Estimated costs for implementing these savings in 2010 were revised upwards to €100 million.

Frequently Asked Questions

CRH is showing a moderating decline in sales and profits, indicating some stabilization in its business environment. The company is actively managing costs and has reduced its net debt significantly. While full-year EBITDA is expected to be lower than the previous year, the trend in the latter part of the year is improving.

CRH is actively implementing and extending its cost reduction programs, now targeting €455 million in gross savings for 2010/2011. However, the estimated costs to implement these savings in 2010 have increased to €100 million. These measures are expected to yield significant operational leverage when markets recover.

CRH remains focused on acquiring businesses that add value within its existing markets. The company has completed seven acquisitions year-to-date and has announced an agreement to increase its stake in Bauking, a German distribution business, to 98%.

Performance varies across segments. In Europe, sales decline moderated in Q3, with Europe Materials expected to be broadly in line with 2009 EBITDA, Europe Products EBITDA around 20% lower, and Europe Distribution EBITDA about 5% below 2009. In the Americas, EBITDA is expected to be around 20% lower for Materials and Products, but Distribution EBITDA is projected to be about 25% higher due to strong cost reduction contributions.