CRH still expecting growth in 2012 despite subdued markets

Irish building materials group CRH surprised even itself with better than expected profits in 2011 after a strong finish to the year.

Having indicated to the market back in November that profit before tax and impairment charges for 2011 would fall somewhere between €678m and €708m, the final figure was €743m, well ahead of market consensus of €656m.

Sales were also ahead of market expectations at €18,081m, up 5% from 2010's €17,173m; the market had been expecting sales of €17,946m.

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Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 3% to €1,656m from €1,6125m in 2010, a shade above the company's guidance of figure of around €1.6bn.

Earnings per share surged 35% to 82.6 cents from 61.3 cents in 2010, versus market expectations of 76.77 cents.

The dividend payment seems to be the only area where the company has not topped expectations, as it has been held at 62.5 cents, versus expectations of a 3.9% increase in the full year payment to 62.85 cents.

Net debt at the end of €3.5bn was in line with the figure from a year earlier, but as a result of the increase in EBITDA the net debt to EBITDA cover ratio improved to 2.1 from 2.2 at the end of 2010, while the EBITDA/net interest cover ratio for the year was 6.4 (2010: 6.5).

The group feels it is still too early to assess the effect of recent financial market volatility on European construction prospects for 2012 although first half demand seems likely to suffer some impact.

Notwithstanding the above, for the year as a whole the group currently expects resilient demand in Poland and Germany and only modest declines from a strong 2011 in Finland and Switzerland (these four countries accounted for roughly a quarter of 2011 group sales).

Activity in CRH's other European markets is likely to be more subdued than in 2011, the group concedes.

"Assuming no major economic or energy market dislocations, we expect to generate further like-for-like revenue growth in 2012 with the achievement of targeted price increases a key priority. This combined with benefits from acquisitions completed in 2011 leads us to expect further progress in the year ahead," CRH's Chief Executive Myles Lee said.

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