Date: Wednesday 09 May 2012
LONDON (ShareCast) - The trading statement from building materials group CRH was a tale of two continents with the performance of Europe spoiling a good showing in the Americas.
The group's performance in the Americas in 2012 have benefited from favourable early weather conditions and a firmer tone in construction markets in the United States, but trading in its European operations has been affected by severe weather conditions in February and by the ongoing impact on sentiment of volatility in Eurozone financial markets.
Overall, cumulative like-for-like group sales to end-April were 2% ahead of 2011, although earnings before interest, tax, depreciation and amortisation (EBITDA) for the period lagged 2011 due to the tough start in its European operations.
CRH expects overall EBITDA in first half of the year to be close to last year's level of 574m, while for the year as a whole the group is still expecting top line like-for-like sales growth.
A cold snap in February contributed to a like-for-like sales decline of around 6% in Europe for the January-February period, but the rate of decline moderated in subsequent months as weather improved to leave cumulative like-for-like sales to end April 4% behind 2011.
On the Materials side, cumulative like-for-like sales for Europe Materials were slightly ahead of the first four months of 2011. As for the Products division, like-for-like sales were down 8% for the first two months of 2012. The subsequent recovery in the following two months was strong in Germany and Denmark but more muted in Benelux, France and Switzerland where weaker government expenditure and consumer confidence has dampened demand. Overall, the European Products division's underlying sales for the first four months of 2012 were 5% behind 2011.
CRH's Distribution businesses were also affected by the weather, and like-for-like sales for the January/February period were 8% below 2011. By the end of April underlying sales in this segment were some 6% behind 2011, the company revealed.
Operations in the Americas delivered a like-for-like increase of 11% in sales for the first four months of 2012.
In Americas Materials, favourable weather contributed to very strong like-for-like volume increases for the first four months with aggregates up 18%, asphalt up 16% and ready-mixed concrete volumes 13% ahead of the same period in 2011.
Americas Products operations saw like-for-like sales some 12% ahead of the first four months of 2011, with the company seeing a welcome improvement in activity and backlog levels in its Pre-cast operations, while in the Building Envelope business higher glass volumes to small scale architectural and store-front applications compensated for delays in some large scale projects.
In Distribution, like-for-like sales rose by around 9% in the first four months of the year. Trading from acquisitions completed during 2011, which are anticipated to add well over $100m in incremental sales in the current year, is in line with expectations; however, due to seasonal factors these businesses will have little operating profit impact in the first half of 2012.