Final Results
CRH PLC
01 March 2005
CRH plc 2004 RESULTS
Year ended 31st December 2004
% change in 2004
2004 2003 Reported In constant
currency
euro m euro m
Sales 12,820 11,080 +16% +22%
Operating profit 1,247 1,045 +19% +25%
Profit before tax 1,017 864 +18% +23%
euro cent euro cent
Earnings per share - excluding goodwill 163.1 136.2 +20% +26%
Earnings per share - including goodwill 143.9 121.9 +18% +24%
Cash earnings per share 256.4 223.4 +15% +21%
Dividend per share 33.0 28.1 +17% +17%
Operating profit Including share of joint ventures and associates but excluding
goodwill amortisation and profit on sale of fixed assets.
The constant currency percentages compare 2004 results with 2003 figures
restated at average 2004 exchange rates.
A landmark year with profit before tax exceeding euro 1 billion for the first
time, reflecting excellent full year organic growth and a significant
incremental contribution from acquisitions.
Although product prices in Ireland failed to compensate for cost increases,
volumes showed satisfactory improvements to leave operating profit of euro 129
million marginally below last year's level.
In Britain and Northern Ireland, underlying organic improvements combined with a
slight strengthening of Sterling resulted in a 12% operating profit advance to
euro 64 million.
In Mainland Europe, more normal weather conditions and underlying sectoral
growth in many of our Materials Division's markets resulted in a 46% increase in
its operating profit to euro 194 million. The Products & Distribution Division
continued to experience subdued markets. However, despite higher input costs,
underlying performance improved and incremental benefits from 2003 and 2004
acquisitions resulted in a 62% advance in operating profit to euro 269 million.
While escalating energy costs eroded the benefits of price improvements for the
Americas Materials Division, a sustained focus on operating cost reduction
helped deliver a modest improvement in underlying US dollar operating profit.
The Americas Products & Distribution Division had a strong year with continuing
good residential demand and ongoing evidence of recovery in the non-residential
sector leading to a 31% increase in US dollar operating profit. Overall results
for the Americas Divisions were 16% ahead in US dollar terms; however the weaker
US dollar resulted in a 6% increase in reported operating profit to euro 591
million.
Reflecting the better trading conditions, the 2004 dividend has been increased
by 17.4%; this is the 21st consecutive year of dividend increase.
Total development activity amounted to euro 1 billion, lower than the euro 1.6
billion of 2003 which included the euro 0.7 billion Cementbouw transaction, but
broadly in line with the levels of development spend in both 2002 and 2001.
Liam O'Mahony, Chief Executive, said today:
'2004 was a landmark year for CRH with profit before tax up 18%, exceeding one
billion euro for the first time; our twelfth consecutive year of profit growth
and testimony to the Group's strategy and performance. Two particular challenges
in the year were the very rapid and severe escalation of energy prices in the
third quarter from already high levels which negatively affected our costs; and
the continued decline of the US dollar. While there is continuing volatility in
energy and currency markets which could impact adversely on economies as the
year progresses, the current 2005 outlook for our markets is on the whole
positive. Against this background, we maintain our relentless emphasis on
performance and the recovery of higher input costs and with our sustained focus
on development, supported by our strong balance sheet and cash flow, we look to
continuing progress in the year ahead.'
Announced Tuesday, 1st March 2005
* * * * * *
RESULTS
Highlights
2004 was a landmark year for CRH, with profit before tax exceeding one billion
euro for the first time. The results highlights are set out below.
Sales: euro 12,820 million, up 16% (up 22% in constant currency terms)
Operating profit*: euro 1,247 million, up 19% (up 25% in constant currency
terms)
Profit before tax: euro 1,017 million, up 18% (up 23% in constant currency
terms)
Earnings per share excluding goodwill amortisation: 163.1c, up 20% (up 26% in
constant currency terms)
Cash earnings per share: 256.4c, up 15% (up 21% in constant currency terms)
Dividend per share: 33.0c, up 17%
Operating profit includes share of joint ventures and associates but is before
goodwill amortisation and profit on sale of fixed assets.
Growth in the US economy improved during the year, but European economies, with
some exceptions, remained relatively sluggish. More normal weather patterns,
particularly in northern Europe which experienced a severe winter and spring in
2003, led to strong first half profit growth; despite 2003's subsequent catch-up
leading to tough comparatives we continued to show profit growth in the second
half of 2004. Two particular challenges in the year were the very rapid and
severe escalation of energy prices in the third quarter from already high levels
which negatively affected our costs; and the continued decline of the US dollar,
fuelled by deficit concerns. While the latter was purely a translation impact,
and does not affect the inherent position of our US businesses, it reduced
reported profit before tax by over euro 40 million.
Overall the Group performed strongly in 2004 with excellent full year organic
growth and a significant incremental contribution from acquisitions.
Dividends
The Board is recommending a final dividend of 23.4c per share, an increase of
17.6% on the 2003 final dividend of 19.9c. This gives a total dividend for the
year of 33.0c, an increase of 17.4% reflecting the better trading conditions. It
is proposed to pay the final dividend on 9th May 2005 to shareholders registered
at close of business on 11th March 2005. A scrip dividend alternative is being
offered to shareholders.
Finance
Incremental costs of financing substantial 2003 and 2004 acquisition activity
were only partly offset by the interest income generated on our strong free cash
flow resulting in an increase in total net interest cost to euro 140 million
(2003: euro 118 million).
The reduction in the effective tax rate to 24.3% (2003: 25.2%) primarily
reflects the lower proportion of US profits.
Net debt increased by just euro 133 million despite a total spend of euro 1.4
billion on acquisitions, investments and capital projects, reflecting the
Group's strong cash generation characteristics. The weaker dollar had a negative
translation impact of euro 200 million on shareholders' funds.
Development
The Europe Materials Division had a busy year with a total development spend of
approximately euro 0.48 billion. The largest deal was the acquisition in June of
a 49% stake, with joint management control, in Secil, a major vertically
integrated manufacturer of cement, aggregates and readymixed concrete in
Portugal with operations in Tunisia and Lebanon. In January, the Division added
significantly to its positions in Switzerland and Finland through the
acquisition of Hastag Holding, the second-largest producer of aggregates and
readymixed concrete in Switzerland with market leadership in the cantons of
Zurich and St. Gallen, and Abetoni, a manufacturer of concrete pipes, piling and
paving products in southwestern Finland. Three other small add-on deals were
completed during the year.
After an exceptionally busy 2003, the Europe Products & Distribution Division
had a quieter, though still active, 2004 with a total development spend of
approximately euro 0.19 billion. The Concrete Products group completed three
deals, the most significant of which was the purchase in June of Ergon, a
Belgian-headquartered manufacturer of precast concrete products with operations
in Belgium, France and Poland. The other Concrete deals were the October
purchase of the remaining 50% interest in Kellen Concrete Products, a high-end
Dutch paving producer, and the December acquisition of Klaps, a manufacturer of
concrete paving, sewerage and water treatment products with five production
locations in northern Belgium. The Clay Products, Insulation, Fencing &
Security, Daylight & Ventilation and Construction Accessories groups each
completed a bolt-on deal in 2004. The Distribution Group added to its expanding
Belgian DIY network with the purchase of three stores in January and just before
year-end completed the purchase of NCD Builders Merchants which added 17 stores
to its chain of builders merchants in the Netherlands. 2004 also saw the joint
venture established in 2003 by CRH (45% stake) and SAMSE (55%) acquire the
remaining 65.3% of the share capital of G. Doras, a regional builders merchant
operating a total of 45 specialist and generalist builders merchanting outlets
in the Burgundy and Franche Comte regions of France.
Development activity in the Americas Materials Division resulted in 12 add-on
transactions to existing operations plus the commencement of a project to
develop a greenfield quarry near Harrisburg, PA, at a total combined cost of
approximately euro 0.16 billion. The largest acquisition completed during the
year was Gallo in New Jersey. This business, with owned and permitted reserves
totalling 300 million tons, is an ideal fit with Tilcon's activities in New
Jersey and is expected to generate significant benefits from consolidation of
existing quarries and savings in transportation and other operating costs. The
Division completed 11 other add-on deals across its four operating regions that
complement existing operations and continue the focus on acquiring strategically
located high quality aggregate reserves.
During 2004, the Americas Products & Distribution Division completed 11 deals
and embarked on six major capital projects at a combined cost of approximately
euro 0.18 billion.
The Architectural Products Group (APG) was the most active group completing five
acquisitions and committing to the construction of five large pallet paver
plants in California, Ohio, Arizona, Pennsylvania and Maryland to service the
fast-growing US homecentre and hardscapes market, and a major block and patio
paver plant near Chicago. APG acquisitions comprised the January purchase of a
50% stake in Paver Systems with three paver plants in Florida and of Greenleaf
Products, which supplies bagged mulch and soil to homecentres and other retail
chains from five plants in Florida, Georgia and Mississippi. The acquisition in
March of an 80% stake in Custom Surfaces, the leading provider of premium
countertops in Georgia and South Carolina and in December of Creative Surfaces,
serving the Birmingham, Alabama market, expanded APG's ties with homebuilders
and homecentres. Anchor Block, a Florida-based producer of segmental retaining
walls and architectural masonry was acquired as a bolt-on in December.
The Precast Group resumed development activity with the acquisition in August of
Mega Cast in Georgia and Newbasis Central in Texas. In July, the Glass Group
expanded geographically into the Northeast with the acquisition of Floral Glass,
a leading fabricator and distributor of architectural glass products with
facilities in New York, Connecticut and New Jersey. The Distribution Group
continued its strategy of increasing its presence in major metropolitan areas
with the January purchase of G.W. Killebrew, the largest distributor of interior
products in the Hawaiian Islands, and the acquisition in August of Metro Roofing
Distributors, a two-branch distributor of windows, siding and roofing products
in Boston, Massachusetts. In June, CRH acquired the final 20% stake in Dell
Orto, the market leader in glass tempering and glass/aluminium distribution in
Chile
Operational review
REPUBLIC OF IRELAND
Including share of joint ventures Analysis of year-on-year change
Total Acquisitions
euro million 2004 2003 change Exchange 2003 2004 Organic
Sales 804 732 +72 - - - +72
% change +10% +10%
Operating profit 129 130 -1 - - - -1
% change -1% -1%
Margin 16.1% 17.8%
Operating profit is arrived at before goodwill amortisation charges and profit
on sale of fixed assets.
In Ireland, residential construction grew strongly, with an estimated record
77,000 house completions compared with 68,800 in 2003. Demand from the
infrastructure sector was also strong but eased somewhat in the closing months
as some major projects were completed ahead of schedule. After a flat first
half, the second half of the year brought evidence of improving commercial and
industrial activity. Although product prices failed to compensate for cost
increases and margins declined somewhat, volumes for the year showed
satisfactory increases and operating profit was just below the 2003 level.
BRITAIN AND NORTHERN IRELAND
Including share of joint ventures Analysis of year-on-year change
Total Acquisitions
euro million 2004 2003 change Exchange 2003 2004 Organic
Sales 749 692 +57 +13 - +7 +37
% change +8% +2% +1% +5%
Operating profit 64 57 +7 +1 - +1 +5
% change +12% +2% +2% +8%
Margin 8.6% 8.3%
Operating profit is arrived at before goodwill amortisation charges and profit/
loss on sale of fixed assets.
While there was an increase in UK housing starts in 2004, overall brick volumes
declined mainly due to the continued movement to less brick-intensive dwellings.
With increased kiln availability following rebuilds, Ibstock brick volumes
declined somewhat less than the market. Higher energy costs impacted the
business but, through a combination of price increases and better productivity,
profits improved. Sales and operating profits in our concrete operations
increased underpinned by a robust performance from the masonry division. Our UK
Fencing & Security operations had an excellent year driven by government
spending and strong market positions. In the Materials Division, Northern
Ireland operations saw higher activity in housing and infrastructure markets.
With organic profit improvements and the benefits of a modest strengthening of
Sterling against the euro, full year operating profit shows an increase on 2003
levels.
MAINLAND EUROPE - MATERIALS
Including share of joint ventures Analysis of year-on-year change
Total Acquisitions JV to
euro million 2004 2003 change Exchange 2003 2004 Assoc Organic
Sales 1,286 1,007 +279 -16 +13 +271 -65 +76
% change +28% -1% +1% +27% -7% +8%
Operating profit 194 133 +61 -2 +1 +40 - +22
% change +46% -2% +1% +30% +17%
Margin 15.1% 13.2%
Operating profit, which also includes share of associates' profit, is arrived at
before goodwill amortisation charges and profit on sale of fixed assets.
JV to Assoc: CRH's option to acquire an additional 25% of the Mashav Group in
Israel expired in early 2004, and the status of the Group's existing 25%
investment changed from joint venture to associate. Accordingly, with effect
from 2004, CRH no longer reports its 25% share of Mashav sales, while the share
of operating profit continues to be included in operating profit.
With more normal weather and underlying sectoral growth in many of the countries
in which we operate, these operations generated strong organic growth and
benefited from significant acquisition activity to deliver a 46% increase in
operating profit.
Finland/Baltics
Overall construction activity in Finland improved with investment in residential
and infrastructure more than compensating for small declines in other sectors.
Sales volumes were strong through 2004 and Abetoni, the concrete products
business acquired at the start of the year, was integrated smoothly into ongoing
operations. Overall profits grew due to the increase in demand, good performance
from acquisitions and tight cost control. The Baltic region, including St.
Petersburg, enjoyed strong volume growth and results continued to improve.
Poland/Ukraine
In Poland, cement demand was exceptionally strong in the first half of the year
reflecting more normal weather conditions than in 2003 and accelerated demand
ahead of the 1st May increase in VAT on construction products. While sales
moderated over the rest of the year, our annual cement volumes increased by over
3%. Demand generally benefited from the firmer economic tone and Polish entry
into the European Union in May. Blacktop and aggregates saw good volume
increases as the Polish national roads programme was rolled out in the second
half of the year while our lime business reported improved profits despite
higher energy costs. Overall profits advanced strongly. The Ukrainian economy
enjoyed good growth in 2004 and our cement sales and profits increased
substantially.
Switzerland
Construction output increased due to ongoing infrastructural investment and
improved residential construction. Our cement, readymixed concrete and
aggregates operations performed well despite intense competition due to the
better market conditions, supplies to major tunnel projects and the successful
acquisition in January of Hastag, the Zurich-based producer of aggregates and
readymixed concrete. Profits were well ahead of 2003 levels.
Spain
Despite further growth in construction output, Spanish markets were competitive
with margins in the important Madrid and Catalonia regions remaining under
pressure. Although our readymixed concrete volumes declined, improved pricing
and operating efficiencies resulted in an outcome similar to 2003.
Portugal
Our June investment in Secil gives a new platform for growth on the Iberian
peninsula and in the Mediterranean basin. Results for the period of ownership
have met our best expectations and exceeded Secil's performance in the
corresponding period of 2003.
Israel
The dominant factor continues to be the difficult political situation. Despite
lower overall volumes, profits were ahead of 2003 due to constant improvement in
operating efficiency, ongoing cost reduction and new marketing initiatives.
MAINLAND EUROPE - PRODUCTS & DISTRIBUTION
Including share of joint ventures Analysis of year-on-year change
Total Acquisitions Re-org.
euro million 2004 2003 change Exch. 2003 2004 Costs Organic
Sales 3,664 2,636 +1,028 -7 +871 +120 - +44
% change +39% -% +33% +4% +2%
Operating profit 269 166 +103 - +83 +7 - +13
% change +62% +50% +4% +8%
Margin 7.3% 6.3%
Operating profit, which also includes share of associates' profit, is arrived at
before goodwill amortisation charges and profit/loss on sale of fixed assets,
and includes re-organisation costs of euro 5 million (2003: euro 5 million).
Markets remained subdued in 2004 and failed to sustain the somewhat firmer tone
evident in the first half of the year. Against this backdrop, and despite higher
input costs particularly in the second half, our underlying performance improved
and incremental benefits from 2003 and 2004 acquisitions resulted in a
significant advance in overall sales and operating profit.
Concrete Products
The group achieved significant growth from both acquisitions and legacy
businesses and profits were well ahead of 2003 despite weakness in key markets
and rising raw material costs. Our Belgian operations achieved good growth and
successfully passed on input cost increases in contrast to our Dutch operations
which faced tough competition due to market overcapacity. Despite weakness in
the German economy, EHL maintained volumes and market position although higher
raw material costs and selling price pressure led to lower profitability. EHL's
Slovakian subsidiary beat expectations. Our French operations reported improved
results and successful integration of the Danish operations acquired in
September 2003 resulted in a strong performance for that business.
Sand-lime Brick
This business, acquired with Cementbouw in late 2003, turned in an excellent
performance in its first full year with CRH.
Cementbouw Joint Venture
Our joint venture in materials trading and readymixed concrete in the
Netherlands experienced tough trading conditions in weaker infrastructure
markets.
Clay Products
Through better pricing and productivity, these businesses achieved improved
results despite weakness in the residential sectors in the Netherlands and
Germany.
Insulation
A strong advance in sales was achieved largely due to full year contributions
from 2003 acquisitions but also through organic growth despite challenging
market conditions. However, immediate recovery through higher selling prices of
unprecedented second-half raw materials cost increases proved difficult,
resulting in a substantial adverse impact on profit.
Building Products
Fencing & Security had a good year and the integration of 2003 acquisitions,
cost control and other synergies resulted in a good profit increase. Daylight &
Ventilation faced disappointing sales in Germany and the Netherlands; however,
with the benefit of prior restructuring and good cost control, profits improved.
The Construction Accessories group, established in 2003, performed very well in
its first full year.
Distribution
While market conditions were less favourable than 2003, record levels of sales
and operating profits were achieved through better performance in the legacy
business and contributions from acquisitions. Our DIY business in the Benelux
had another good year despite weaker consumer confidence while our joint venture
in Portugal made further progress. In builders merchanting, profits in the
Netherlands improved substantially aided by the Cementbouw acquisition and our
specialist merchants generally performed well although the ironmongery business
had another difficult year. Merchanting activities in Switzerland made further
significant progress with improved sales and an advance in operating profit.
Profits in our 100%-owned business in Ile-de-France were lower than in 2003;
however, we benefited from our increased stake in associate SAMSE and the Doras
joint venture.
THE AMERICAS - MATERIALS
Including share of joint ventures Analysis of year-on-year change
Total Acquisitions
euro million 2004 2003 change Exchange 2003 2004 Organic
Sales 2,842 2,831 +11 -257 +48 +40 +180
% change -% -9% +2% +1% +6%
Operating profit 272 291 -19 -26 -4 +6 +5
% change -7% -9% -1% +2% +1%
Margin 9.6% 10.3%
Operating profit is arrived at before goodwill amortisation charges and profit
on sale of fixed assets.
Overall, activity levels in this Division benefited from good residential demand
offset by somewhat weaker highway spending. This was reflected in improvements
in heritage aggregate (+6%) and readymixed concrete (+11%) volumes and a modest
decline (-1%) in asphalt volumes. However, escalating energy costs, which
reached unprecedented levels through the busy autumn construction season, fed
through rapidly into input costs eroding the benefits of price improvements and
resulting in an overall margin decline. Although a strong focus on operating
cost reduction delivered a modest improvement in underlying US dollar operating
profit, an adverse translation impact resulted in lower reported euro operating
profit for this Division.
New England
Our operations in New Hampshire, Maine and Massachusetts experienced good
volumes from solid state highway programmes; however, high energy costs reduced
margins especially in asphalt. Connecticut markets were muted with private
construction remaining strong but highway markets were impacted by the state
budget deficit and local political issues while Vermont continued to divert
paving monies to several ongoing large projects. Higher energy costs led to
lower operating margins and left profit below 2003 levels.
New York/New Jersey
Aggregates operations in the New York Metropolitan area benefited from good
markets in both private and infrastructure sectors with buoyant residential
markets in and around Manhattan combined with several large transit and water/
sewer projects. In New Jersey, asphalt margins were lower due to intense
competition although the aggregates business improved. In Upstate New York,
profits in the Albany region improved while in Rochester, despite management
action, our results declined as the market continued to suffer from cutbacks at
several large local employers. Overall, results were broadly unchanged on 2003
levels.
Central
In Pennsylvania and Delaware, results declined significantly due to intense
competition and poor highway markets. West Virginia results improved but our
Ohio operations were unable to recover the impact of higher energy costs despite
a fairly strong market environment. Michigan was disappointing due to severe
cutbacks in the highway programme as the state authorities wait to see what the
re-authorisation of the US Federal highway funding programme means to Michigan
before addressing their lack of highway funding. Overall profit declined.
West
This region comprises over 270 locations across a wide geographic area in 12
states west of the Mississippi River. Trading conditions varied across the
region but overall market strength, the integration of recent acquisitions and
cost reduction programmes resulted in significantly higher profits. Utah and
Idaho saw significant volume increases, benefiting from improved residential and
non-residential markets after a number of slack years. Our asphalt business also
increased profits as the states continued to refocus their expenditures in
asphalt- intensive maintenance projects. Colorado advanced due to stronger
highway markets. Wyoming and South Dakota continued to perform exceptionally
well, while our small operations in New Mexico returned to profitability
following significant cost reduction. Subdued markets and continued tough
competition resulted in a slight decline in profits in our Washington and
Montana operations.
THE AMERICAS - PRODUCTS & DISTRIBUTION
Including share of joint ventures Analysis of year-on-year change
Total Acquisitions
euro million 2004 2003 change Exchange 2003 2004 Organic
Sales 3,475 3,182 +293 -278 +104 +149 +318
% change +9% -9% +3% +5% +10%
Operating profit 319 268 +51 -23 +11 +18 +45
% change +19% -9% +4% +7% +17%
Margin 9.2% 8.4%
Operating profit is arrived at before goodwill amortisation charges and profit
on sale of fixed assets.
The Division had a strong year with residential demand continuing at a good
level and ongoing evidence of recovery in the non-residential sector. Internal
cost control initiatives and pro-active pricing mitigated the impact of sharp
increases in input costs and, together with strong volumes, led to improved
margins overall. The Division recorded a 20% increase in sales and a 31%
increase in operating profit in US dollar terms with all product groups
reporting strong improvements.
Architectural Products (APG)
During 2004 APG pursued operational improvements and selective price increases
to meet the challenges of rising energy and cement costs and reported record
sales and profits. The Northeast and South regions, along with clay brick
producer Glen-Gery, performed particularly well. The group saw significant gains
with retail customers and in its Belgard(R) hardscapes business.
Precast
General improvement in construction markets, as well as a modest turnaround in
the telecommunications sector, resulted in a 10%+ improvement in sales in our
legacy precast operations. We came into the year with a stronger backlog and
maintained that early momentum throughout the year. Improved prices and overhead
cost savings were achieved which helped offset significant increases in steel,
cement and fuel and, with strong volume increases, profits showed a strong
improvement.
Glass
Trading conditions improved in 2004 and a modest recovery in commercial
construction together with contributions from 2003 and 2004 acquisitions
resulted in significant sales and profit growth.
Distribution
Overall the business environment for our operations was good in 2004. The
Atlantic seaboard in particular was buoyant; the Midwest, where our presence is
not as large, was softer. The devastating hurricanes in August and September led
to a significant increase in demand in Florida. The steep increases in the price
of many of the commodities handled by the group facilitated further gains in
gross margins, although some of these gains may be of a one-time nature. The
Distribution group has had several years of good sales and profit growth and
achieved records for both in 2004.
South America
Our operations in Argentina and Chile delivered improved results. In Argentina,
our clay products business achieved a strong performance with increased domestic
shipments being complemented by export sales. Our glass business prospered from
strong export sales. In a competitive environment our Chilean glass business
re-focussed towards value-added products and took aggressive measures on cost
control to record an improvement in results.
International Financial Reporting Standards
The results announced today are reported under Irish/UK GAAP. Restated Interim
2004 and full year 2004 results for the Group under International Financial
Reporting Standards (IFRS) will be made available during the second quarter of
2005. The trading statement for the first six months of 2005, to be issued in
early July, will provide guidance under IFRS and the Interim 2005 results will
be reported under IFRS.
Outlook
While there is continuing volatility in energy and currency markets which could
impact adversely on economies as the year progresses, the current 2005 outlook
for the various markets in which CRH operates is on the whole positive.
In Ireland, overall construction output is expected to decline somewhat as
housing falls back from an all-time high; however on the positive side, a firmer
general economy should benefit the industrial and commercial sectors. While
there is significant Government commitment to ongoing infrastructure projects
and a busy roads programme for 2005, activity may be affected somewhat by the
accelerated completion of projects in 2004 and the timing of new start-ups.
Construction output in Finland should be stable with completion of some major
infrastructure projects offset by increasing demand in industrial and commercial
sectors and steady housing. With EU funds now beginning to flow, the Polish
construction industry should receive a welcome boost in 2005. In Switzerland,
cement sales to a number of major infrastructure projects are set to decline as
these projects near completion; however, general market volumes are expected to
remain stable. In Spain, construction activity is expected to continue at
current levels while Portugal should see growth in the construction sector in
line with the projected 2% growth in the economy. The current outlook for the
Netherlands is for modest growth driven by new housing and broadly-based
renovation investment. Belgium is also expected to enjoy stronger housing and
continued strength in commercial activity. After a good 2004, due in part to tax
incentives for the housing market, growth in France is forecast to moderate in
2005. Construction demand in Germany is expected to show a further decline.
Growth in UK construction is forecast at lower levels than in recent years.
Overall, we look to further progress in our European operations in 2005.
At this stage 2005 economic growth looks likely to be solid in the US. House
building, which is underpinned by demographics, moderate unemployment and
ongoing low real interest rates is expected to remain broadly at current strong
levels. The recovery of non-residential construction following the declines of
recent years picked up pace during 2004 and this positive trend should continue
robustly throughout 2005. TEA-21, the Federal funding programme for
transportation which was due to expire on 30th September 2003, has been extended
to end-May 2005 at an annualised level of US$34.4 billion. A new six-year
programme is expected to be authorised towards mid-year 2005 and, although this
is unlikely to benefit the current year, it should lead to stronger volumes
thereafter. While State finances are generally improving some still face
deficits and, combined with the delayed Federal funding re-authorisation, this
may result in a modest decline in highway markets in 2005. Taking all these
factors together, we look to an improved dollar outcome in the year ahead in the
Americas.
Against this background, we maintain our relentless emphasis on performance and
the recovery of higher input costs and with our sustained focus on development,
supported by our strong balance sheet and cash flow, we look to continuing
progress in the year ahead.
* * * *
This results announcement contains certain forward-looking statements as defined
under US legislation. By their nature, such statements involve uncertainty; as a
consequence, actual results and developments may differ from those expressed in
or implied by such statements depending on a variety of factors including the
specific factors identified in this announcement and other factors discussed in
our Annual Report on Form 20-F filed with the SEC.
Group profit and loss account
for the year ended 31st December 2004
Continuing operations
Acquisitions Total Total
2004 2004 2004 2003 %
euro m euro m euro m euro m change
Sales, including share of joint ventures 12,232.3 587.4 12,819.7 11,079.8 +15.7%
Less: share of joint ventures (338.7) (200.9) (539.6) (305.5)
Group sales 11,893.6 386.5 12,280.1 10,774.3 +14.0%
Cost of sales (8,136.2) (276.0) (8,412.2) (7,461.3)
Gross profit 3,757.4 110.5 3,867.9 3,313.0
Operating costs excluding goodwill (2,642.2) (67.8) (2,710.0) (2,308.5)
amortisation
Group operating profit excluding goodwill 1,115.2 42.7 1,157.9 1,004.5
amortisation
Share of joint ventures' operating profit 38.6 28.8 67.4 39.5
Share of associates' operating profit 21.7 - 21.7 0.7
Operating profit, including share of joint 1,175.5 71.5 1,247.0 1,044.7 +19.4%
ventures and associates
Goodwill amortisation (96.9) (4.5) (101.4) (75.5)
Profit on disposal of fixed assets 8.2 3.1 11.3 13.0
Profit on ordinary activities before 1,086.8 70.1 1,156.9 982.2
interest
Group interest payable (net) (126.0) (112.8)
Share of joint ventures' and associates' net interest (13.9) (5.2)
Profit on ordinary activities before taxation 1,017.0 864.2 +17.7%
Taxation on profit on ordinary activities (247.1) (217.6)
Profit on ordinary activities after taxation 769.9 646.6
Profit applicable to equity minority interests (7.8) (5.9)
Preference dividends (0.1) (0.1)
Profit for the year attributable to ordinary shareholders 762.0 640.6 +18.9%
Dividends paid (51.0) (43.2)
Dividends proposed (124.7) (105.0)
Profit retained for the financial year 586.3 492.4
Earnings per share for the year
Basic
- Including goodwill amortisation 143.9c 121.9c +18.0%
- Excluding goodwill amortisation 163.1c 136.2c +19.8%
Diluted
- Including goodwill amortisation 142.8c 120.6c +18.4%
- Excluding goodwill amortisation 161.7c 134.8c +20.0%
Cash earnings per share for the year 256.4c 223.4c +14.8%
Dividend per share 33.0c 28.1c +17.4%
Movements on profit and loss account
2004 2003
euro m euro m
At 1st January 2,490.2 2,520.3
Profit retained for the financial year 586.3 492.4
Currency translation effects on results for the year (16.8) (23.7)
Currency translation effects on foreign currency net investments (183.3) (498.8)
At 31st December 2,876.4 2,490.2
Statement of total recognised gains and losses
for the year ended 31st December 2004
2004 2003
euro m euro m
Profit for the year attributable to ordinary shareholders 762.0 640.6
Currency translation effects on results for the year (16.8) (23.7)
Currency translation effects on foreign currency net investments (183.3) (498.8)
Total recognised gains and losses for the financial year 561.9 118.1
Group balance sheet
as at 31st December 2004
2004 2003
euro m euro m euro m euro m
Fixed assets
Intangible asset - goodwill 1,443.5 1,474.5
Tangible assets 5,319.9 5,145.4
Financial assets:
Joint ventures
- share of gross assets 993.1 560.1
- share of gross liabilities (535.1) (330.4)
- loans to joint ventures 83.5 62.3
Associates 149.2 44.6
Other investments 11.7 12.1
702.4 348.7
7,465.8 6,968.6
Current assets
Stocks 1,249.6 1,117.6
Debtors 1,829.8 1,681.2
Cash and liquid investments 1,322.4 1,298.0
4,401.8 4,096.8
Creditors (amounts falling due within one year)
Bank loans and overdrafts 412.0 510.3
Trade and other creditors 1,638.0 1,499.7
Corporation tax 73.0 77.9
Dividends proposed 124.7 105.0
2,247.7 2,192.9
Net current assets 2,154.1 1,903.9
Total assets less current liabilities 9,619.9 8,872.5
Creditors (amounts falling due after more than one year)
Loans 3,351.1 3,095.8
Deferred acquisition consideration 103.4 96.5
3,454.5 3,192.3
Capital grants 11.0 12.7
Provisions for liabilities and charges 854.0 818.0
5,300.4 4,849.5
Capital and reserves
Called-up share capital
Equity share capital 181.0 179.3
Non-equity share capital 1.2 1.2
Equity reserves
Share premium account 2,149.3 2,078.3
Other reserves 9.9 9.9
Profit and loss account 2,876.4 2,490.2
Shareholders' funds 5,217.8 4,758.9
Minority shareholders' equity interest 82.6 90.6
5,300.4 4,849.5
Group cash flow statement
for the year ended 31st December 2004
2004 2003
euro m euro m
Net cash inflow from operating activities 1,545.0 1,396.2
Dividends received from joint ventures and associates 30.1 19.4
Returns on investments and servicing of finance
Interest received 22.2 36.1
Interest paid (139.9) (140.5)
Finance lease interest paid (2.4) (0.7)
Preference dividends paid (0.1) (0.1)
(120.2) (105.2)
Taxation
Irish corporation tax paid (16.0) (19.6)
Overseas tax paid (172.4) (83.3)
(188.4) (102.9)
Capital expenditure
Purchase of tangible assets (520.2) (402.0)
Capital grants received 0.1 0.1
Disposal of fixed assets 100.1 77.9
(420.0) (324.0)
Investment in subsidiary, joint venture and associated undertakings
Acquisition of subsidiary undertakings (498.5) (1,439.0)
Deferred acquisition consideration (57.3) (56.8)
Investments in and advances to joint ventures and associates (358.2) (79.5)
(914.0) (1,575.3)
Equity dividends paid (127.1) (122.8)
Cash outflow before use of liquid investments and financing (194.6) (814.6)
Cash (outflow)/inflow from management of liquid investments (39.4) 110.4
Financing
Issue of shares 37.4 13.7
Expenses paid in respect of share issues (0.3) (0.1)
Increase in term debt 166.8 688.4
New finance leases/(capital element of finance leases repaid) 31.6 (3.1)
235.5 698.9
Increase/(decrease) in cash and demand debt in the year 1.5 (5.3)
Reconciliation of net cash flow to movement in net debt
Increase/(decrease) in cash and demand debt in the year 1.5 (5.3)
Increase in term debt including finance leases (198.4) (685.3)
Cash outflow/(inflow) from management of liquid investments 39.4 (110.4)
Change in net debt resulting from cash flows (157.5) (801.0)
Loans and finance leases, net of liquid investments, acquired with subsidiaries (7.8) (40.0)
(165.3) (841.0)
Translation adjustment 32.7 242.8
Movement in net debt in the year (132.6) (598.2)
Net debt at 1st January (2,308.1) (1,709.9)
Net debt at 31st December (2,440.7) (2,308.1)
Supplementary information
1. Translation of foreign currencies
These financial statements are presented in euro. Results and cash flows of
subsidiary, joint venture and associated undertakings based in non-euro
countries have been translated into euro at average exchange rates for the year,
and the related balance sheets have been translated at the rates of exchange
ruling at the balance sheet date. Adjustments arising on translation of the
results of non-euro subsidiary, joint venture and associated undertakings at
average rates, and on restatement of the opening net assets at closing rates,
are dealt with in reserves, net of differences on related currency borrowings.
All other translation differences are included in arriving at operating profit.
Rates used for translation of results and balance sheets into euro were as
follows:
Average Year-end
Euro 1 = 2004 2003 2004 2003
US Dollar 1.2439 1.1312 1.3621 1.2630
Pound Sterling 0.6787 0.6920 0.7051 0.7048
Polish Zloty 4.5268 4.3996 4.0845 4.7019
Swiss Franc 1.5438 1.5212 1.5429 1.5579
Argentine Peso 3.6572 3.3314 4.0488 3.6955
2. Accounting policies
These financial statements have been prepared under Irish/UK GAAP on the basis
of the policies as set out in the financial statements for the year ended 31st
December 2003 published in CRH's 2003 Annual Report.
3. Key components of 2004 performance
Operating Goodwill Profit on Profit Net Profit
Turnover profit amortisation disposals before interest before
euro million before interest cost tax
goodwill
2003 as reported 11,080 1,045 (76) 13 982 (118) 864
Exchange effects (545) (50) 3 - (47) 7 (40)
2003 at 2004 10,535 995 (73) 13 935 (111) 824
exchange rates
Incremental impact
in 2004 of:
- 2003 1,036 91 (23) - 68 (39) 29
acquisitions
- 2004 587 72 (5) - 67 (17) 50
acquisitions
- change from jv (65) - - - - - -
to associate
- rationalisation - - - - - - -
Ongoing operations 727 89 - (2) 87 27 114
2004 as reported 12,820 1,247 (101) 11 1,157 (140) 1,017
% change as +15.7% +19.3% +17.8% +17.7%
reported
% change at +21.7% +25.3% +23.7% +23.4%
constant
2004 rates
4. Geographical analysis
Sales 2004 2003
euro m % euro m %
Republic of Ireland 803.5 6.3 731.6 6.6
Britain and Northern Ireland 748.5 5.8 691.5 6.3
Mainland Europe 4,939.5 38.5 3,635.3 32.8
The Americas 6,328.2 49.4 6,021.4 54.3
Total including share of joint ventures 12,819.7 100 11,079.8 100
Less: share of joint ventures (539.6) (305.5)
Total excluding share of joint ventures 12,280.1 10,774.3
Profit before 2004
interest
Operating profit Goodwill Profit on Profit before
before goodwill amortisation disposal interest
% euro m euro m euro m Euro m
Republic of Ireland 10.4 129.2 (0.3) 0.6 129.5
Britain and Northern 5.2 64.3 (5.4) (1.0) 57.9
Ireland
Mainland Europe 37.0 461.3 (54.5) (0.4) 406.4
The Americas 47.4 592.2 (41.2) 12.1 563.1
Total including jv's 100 1,247.0 (101.4) 11.3 1,156.9
and associates
Less: share of jv's (89.1) 8.3 (2.0) (82.8)
and associates
Total excluding jv's 1,157.9 (93.1) 9.3 1,074.1
and associates
2003
Operating profit Goodwill Profit on Profit before
before goodwill amortisation disposal interest
% euro m euro m euro m Euro m
Republic of Ireland 12.4 129.9 (0.3) 3.4 133.0
Britain and Northern 5.5 57.4 (5.1) 3.5 55.8
Ireland
Mainland Europe 28.5 297.8 (34.0) 3.1 266.9
The Americas 53.6 559.6 (36.1) 3.0 526.5
Total including 100 1,044.7 (75.5) 13.0 982.2
joint ventures
Less: share of joint (40.2) 1.5 (1.1) (39.8)
ventures
Total excluding 1,004.5 (74.0) 11.9 942.4
joint ventures
5. Analysis by Division / Class of business
Sales 2004 2003
euro m % euro m %
Europe Materials 2,353.5 18.3 1,983.8 17.9
Europe Products 2,245.0 17.5 1,720.6 15.5
Europe Distribution 1,904.1 14.9 1,361.8 12.3
Americas Materials 2,841.7 22.2 2,831.3 25.6
Americas Products 2,461.6 19.2 2,196.3 19.8
Americas Distribution 1,013.8 7.9 986.0 8.9
Total including share of joint ventures 12,819.7 100 11,079.8 100
Less: share of joint ventures (539.6) (305.5)
Total excluding share of joint ventures 12,280.1 10,774.3
Profit before interest 2004
Operating profit Goodwill Profit on Profit before
before goodwill amortisation disposal interest
% euro m euro m euro m euro m
Europe Materials 27.2 339.4 (21.2) 0.6 318.8
Europe Products 15.2 189.6 (24.2) 0.8 166.2
Europe Distribution 10.2 126.9 (14.8) (2.2) 109.9
Americas Materials 21.8 271.5 (19.2) 5.8 258.1
Americas Products 20.5 255.6 (17.6) 4.8 242.8
Americas Distribution 5.1 64.0 (4.4) 1.5 61.1
Total incl. jv's and 100 1,247.0 (101.4) 11.3 1,156.9
associates
Less: share of jv's and (89.1) 8.3 (2.0) (82.8)
associates
Total excl. jv's and 1,157.9 (93.1) 9.3 1,074.1
associates
2003
Operating profit Goodwill Profit on Profit before
before goodwill amortisation disposal interest
% euro m euro m euro m euro m
Europe Materials 26.2 273.3 (20.3) 6.3 259.3
Europe Products 13.7 142.6 (16.1) 2.6 129.1
Europe Distribution 6.7 70.1 (3.0) 1.1 68.2
Americas Materials 27.8 290.7 (17.9) 2.8 275.6
Americas Products 20.6 215.6 (14.0) (0.7) 200.9
Americas Distribution 5.0 52.4 (4.2) 0.9 49.1
Total including joint 100 1,044.7 (75.5) 13.0 982.2
ventures
Less: share of joint (40.2) 1.5 (1.1) (39.8)
ventures
Total excluding joint 1,004.5 (74.0) 11.9 942.4
ventures
6. Earnings per share
The computation of basic and diluted earnings per share is set out below:
2004 2003
euro m euro m
Numerator for basic and fully diluted earnings per share
Profit for the year attributable to ordinary shareholders 762.0 640.6
Goodwill amortisation, including share of joint ventures and associates 101.4 75.5
Attributable profit, excluding goodwill amortisation 863.4 716.1
Depreciation charge 494.4 458.2
Numerator for cash earnings per share 1,357.8 1,174.3
Denominator for basic earnings per share Number of shares Number of shares
Weighted average number of shares (millions) in issue 529.5 525.7
Effect of dilutive potential ordinary shares (employee share options) 4.3 5.4
Denominator for diluted earnings per share 533.8 531.1
Basic earnings per share euro cent euro cent
- Including goodwill amortisation 143.9 121.9
- Excluding goodwill amortisation 163.1 136.2
Diluted earnings per share
- Including goodwill amortisation 142.8 120.6
- Excluding goodwill amortisation 161.7 134.8
Cash earnings per share (i) 256.4 223.4
Cash earnings per share, a non-GAAP financial measure, is presented here for
information as the Company believes it is a useful financial indicator of a
company's ability to generate cash from operations.
7. Reconciliation of operating profit to net cash inflow from operating activities
2004 2003
euro m euro m
Group operating profit excluding goodwill amortisation 1,157.9 1,004.5
Depreciation charge 494.4 458.2
Capital grants released (1.8) (2.0)
Net movement on provisions (10.4) (2.5)
Increase in working capital (excluding net change in interest accrual) (95.1) (62.0)
Net cash inflow from operating activities 1,545.0 1,396.2
8. Summarised cash flow
The following table summarises the Group's cash flows for 2004 and 2003.
2004 2003
euro m euro m
Inflows
Profit before tax 1,017 864
Depreciation 494 458
Goodwill amortisation 101 76
1,612 1,398
Outflows
Tax paid 188 103
Dividends 163 150
Capital expenditure 520 402
Working capital movement 100 58
Other 58 30
1,029 743
Operating cash flow 583 655
Acquisitions and investments (922) (1,615)
Disposals 100 78
Share issues (net of expenses) 73 41
Translation adjustment 33 243
Increase in net debt (133) (598)
9. Movements in shareholders' funds
2004 2003
euro m Euro m
At 1st January 4,758.9 4,747.9
Profit retained for the financial year 586.3 492.4
Currency translation effects (200.1) (522.5)
Issue of ordinary share capital (net of expenses) 72.7 41.1
At 31st December 5,217.8 4,758.9
10. Other
2004 2003
Interest cover, excluding joint ventures and associates
- EBITDA (times) 13.2 13.1
- EBIT (times) 8.5 8.4
EBITDA = earnings before interest, tax, depreciation and goodwill amortisation
EBIT = earnings before interest and tax
Interest cover is calculated by dividing EBITDA and EBIT by
Group interest payable (net).
529.5 525.7
Average shares in issue (millions)
Net dividend per share (euro cent) 33.0c 28.1c
Dividend cover (times) 4.3 4.3
Depreciation charge (euro million) 494.4 458.2
Goodwill amortisation charge (euro million)
- subsidiaries 93.1 74.0
- share of joint ventures and associates 8.3 1.5
Net debt (euro million) 2,440.7 2,308.1
Debt ratio 46% 48%
Debt to year-end market capitalisation 23% 27%
11. Abbreviated accounts
The results disclosed herein do not represent full accounts. Full accounts for
the year ended 31st December 2004, upon which the Auditors have given an
unqualified audit report, have not yet been filed with the Registrar of
Companies. Full accounts for the year ended 31st December 2003 containing an
unqualified audit report from the Auditors have been delivered to the Registrar
of Companies.
12. Board approval
This results announcement was approved by the Board of Directors of CRH plc on
28th February 2005.
13. Annual Report post-out and Annual General Meeting (AGM)
The 2004 Annual Report is expected to be posted to shareholders on Thursday,
31st March 2005 together with details of the Scrip Dividend Offer in respect of
the final 2004 dividend. The 2004 Annual Report will be available to the public
from Friday, 1st April 2005 at the Company's registered office. The Group's AGM
is scheduled to be held in Jurys Hotel, Ballsbridge, Dublin on Wednesday, 4th
May 2005.
* * * * * *
CRH plc, Belgard Castle, Clondalkin, Dublin 22
Telephone: +353.1.404.1000 Fax: +353.4.404.1007 email: mail@crh.com website:
www.crh.com
Registered Office: 42 Fitzwilliam Square, Dublin 2, Ireland
* * * * * *
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