CRH gives a bleak outlook
CRH, the Irish building materials company listed in Dublin and London, is likely to paint a bleak picture for the US and European housing markets in its annual meeting statement on Wednesday.
Weak foundations: Profits from materials are falling.
Chief executive Myles Lee is expected to reveal a decline in US materials volumes of between eight per cent and 12%, although prices are holding up better for CRH than for some of its competitors.
However, profits in the US materials business could be up to 20% lower, which analysts say would equate to a six per cent decline in group profits.
Lee is likely to say trading in Europe and the US is still showing unprecedented declines with no sign of imminent recovery.
However, he will stress that CRH is in a strong position to make opportunistic acquisitions having raised £1.1bn through a rights issue in March. Well over half the cash will be put into an acquisitions war chest, with the remainder used to pay down debt.
Brokers estimate that CRH has a total of about £2.6bn to spend as rivals in the sector are forced to sell assets.
The company reported a 16% decline in profits for the year to December 31 from £1.7bn to £1.4bn. Sales remained flat at about £18.6bn.
Current-year profits are also likely to be dented by the severe winter weather in the US and Europe.
But this will be partly offset by falling energy costs, interest rate reductions and the recently announced fiscal stimulus of US President Barack Obama.
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