8-K

CRH PUBLIC LTD CO 8-K Report (Jul 10, 2013)

Filed July 10, 2013For Securities:CRH

Summary

This 8-K filing from CRH Public Ltd Co, filed on July 10, 2013, provides an update on the company's performance and outlook as of May 8, 2013, in accordance with the EU Transparency Directive. The report highlights a mixed performance across its geographic segments, with the Americas showing resilience and growth, while Europe faces significant headwinds due to a weak economic backdrop and prolonged winter weather. CRH is actively managing these challenges through cost initiatives and strategic acquisitions. For the first half of 2013, CRH anticipates an EBITDA of approximately €0.4 billion, impacted by unrecouped sales shortfalls in Europe and the absence of prior-year non-recurring gains. Despite these near-term pressures, the company expects the second half of 2013 to show improvement. This optimism is driven by continued positive underlying trends in the U.S., contributions from recent acquisitions, and the benefits of ongoing cost-saving measures, leading to an expectation that second-half EBITDA will surpass the previous year's levels.

Key Highlights

  • 1Europe experienced an 11% year-over-year sales decline in the January-April period due to a weak economic environment and severe winter weather, with specific challenges noted in Materials (Poland, Ukraine) and Products businesses.
  • 2The Americas segment reported a 2% year-over-year sales increase for the January-April period, driven by improving economic and construction trends in the U.S., partially offset by adverse weather.
  • 3CRH expects first-half 2013 EBITDA to be approximately €0.4 billion, significantly impacted by unrecouped sales shortfalls in Europe and the absence of €44 million in non-recurring gains from H1 2012.
  • 4The company has completed 15 acquisition and investment transactions year-to-date in 2013, totaling approximately €385 million, including strategic moves in Spain and Canada, and a pending acquisition in Ukraine.
  • 5CRH anticipates second-half 2013 EBITDA to be ahead of the corresponding period in 2012, supported by ongoing recovery in the U.S., acquisitions, and cost-saving measures, despite continued trading pressures in Europe.
  • 6The company is implementing additional cost reduction measures in Europe to counteract market weakness.
  • 7New IFRS reporting standards effective January 1, 2013, require joint ventures to be equity accounted, impacting how their results are reported and necessitating restatements for comparative 2012 periods.

Frequently Asked Questions

The primary reasons for the sales decline in Europe are a combination of a weak economic backdrop and prolonged severe winter weather conditions, particularly through March and into mid-April, which significantly impacted construction activity.

CRH anticipates that its second-half 2013 EBITDA will be ahead of the corresponding period in 2012. This outlook is based on the expectation that positive underlying economic and business trends in the United States will outweigh the continued trading pressures in Europe, supported by contributions from recent acquisitions and the net benefits of cost-saving measures.

CRH has been actively pursuing growth through acquisitions and investments. As of May 8, 2013, the company had completed 15 transactions totaling approximately €385 million. Notable acquisitions include Cementos Lemona in Spain and a significant concrete products business in western Canada. CRH has also announced an agreement to acquire Mykolaiv Cement in Ukraine, which would make it the market leader there.

Effective January 1, 2013, new IFRS standards require joint ventures to be equity accounted. This means CRH will report its share of joint venture profits as a single line item in its income statement, rather than proportionately consolidating their results and net assets. A revised pension accounting standard will also change the calculation of net pension expense. For comparative purposes, CRH will restate its first half and full year 2012 income statements to reflect these changes, which will reduce reported 2012 results.