Ireland: CRH expects the Eurozone's economic problems to deepen a slide in sales in the second half of 2012, preventing it from raising profits despite a recovery in the US construction market.
For its interim results for the six months ending on 30 June 2012 the Irish building materials group reported a 5% rise in sales revenue, to Euro8.59bn from Euro8.17bn in the same period in 2011. Earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 1% to Euro568m from Euro574m.
"The big question is whether Germany and some of the economies that are performing well can compensate and continue to deliver growth for the Eurozone overall," said chief executive Myles Lee.
"We just don't see how the Eurozone can get their act together in time to have a significant impact in the second half," chief financial officer Maeve Carton added.
Sales in the US, where CRH is the leading producer of asphalt for highway construction, rose 8% on a like-for-like basis in the first half compared with a 5% drop in Europe where bad weather added to governments' debt problems. But CRH noted that the rate of economic growth in the US is tailing off and forecast that sales growth in the second half in the region will be 'well below' the 8% sales growth in the first half.
First-half results were propped up by favourable weather conditions and improving construction markets in the US, with revenue, profit and margin growth across all three of its divisions in the first-half, said CRH. The company said that key European markets such as the Netherlands continue to struggle, while it is expecting a contraction in sales in Poland in the second half of 2012.
The company is seeking to cut costs by more than Euro2bn over a five-year period in response.