CRH scales back profit guidance

Building materials giant CRH has scaled back its earnings forecast this year on the back of ongoing weakness in Europe and Hurricane Sandy disrupting its operations in eastern America.

After a flat like-for-like (LFL) sales performance in the first half, with an 8% increase in the Americas being offset by a 5% decline in Europe, CRH experienced "much lower growth in our Americans operations and a higher rate of decline in Europe" in the third quarter. As such, group LFL sales declined by 3% and were down a total 1% for the first nine months of they year.

However, overall sales revenue (which includes the net impact of acquisitions, divestments and exchange rate movements) rose 1% in the quarter to €5.3bn, with nine-month revenues up 4% at €13.5bn.

Earnings before interest, tax, depreciation and amortisation (EBITDA) was flat in both the third quarter (at €0.65bn) and year-to-date (€1.2bn).

Going into the final three months of the year, the company said that while the storms in the US should result in increased demand for reconstruction work next year, they have caused "significant disruption" to its operations over the past two weeks.

"With this negative short-term impact, and the ongoing weakness in certain major European markets, we anticipate that EBITDA for the last three months of the year will be below 2011," CRH said.

What's more, the group is facing tough comparatives: mild weather in November/December 2011 in both Europe and the US contributed to a strong fourth-quarter EBITDA outcome last year.

Full-year EBITDA this year is expected to come in at €1.6bn, below 2011's€1.65bn. The company's guidance in August was for a flat reading year-on-year, with adverse exchange rate movements also having an impact.