Final Results
CRH PLC
07 March 2006
CRH plc 2005 RESULTS
Year ended 31st December 2005
2005 2004 % change
euro m euro m
• Sales 14,449 12,755 +13%
• Operating profit * 1,392 1,220 +14%
• Profit before tax 1,279 1,104 +16%
euro cent euro cent
• Earnings per share 186.7 163.6 +14%
• Cash earnings per share 292.5 261.8 +12%
• Dividend 39.0 33.0 +18%
* Under IFRS, operating profit for both 2005 and 2004 does not reflect any
charge for goodwill amortisation and is stated before profit on disposal of
fixed assets.
• CRH once again produced record sales and profits, a combination of strong
underlying organic growth and good incremental contributions from
acquisitions.
• Total operating profit from European operations improved 7% to euro 676
million.
• In Europe Materials, operating profit improved 18% to euro 377 million
reflecting a full-year share of profit from Secil (acquired June 2004) in
Portugal and a strong underlying advance.
• Europe Products was impacted by generally subdued trading and a sharp
decline in results from Insulation activities. Operating profit fell 8% to
euro 176 million.
• Operating profit of euro 123 million from Europe Distribution was just ahead
of 2004 against a background of subdued Dutch retail demand and poor weather
early in the year.
• Total operating profit for the Americas operations increased by 22% to euro
716 million.
• Americas Materials achieved significant success in recovering higher energy
costs with a 20% increase in operating profit to euro 328 million and a
welcome improvement in margin.
• With continuing strong US residential construction and ongoing recovery in
non-residential construction, Americas Products delivered a 23% increase in
operating profit to euro 308 million.
• Americas Distribution performed particularly strongly reporting a 27%
increase in operating profit to euro 80 million, while operating profit
margin improved to 7.0% (2004: 6.2%).
• Total dividend has been increased by 18.2% making 2005 the 22nd consecutive
year of dividend increase. This follows a 17.4% increase in 2004.
• Total development activity amounted to euro 1.45 billion.
Liam O'Mahony, Chief Executive, said today:
'CRH continued to move forward on many fronts in 2005, once again producing new
record sales and profits, with strong underlying profit growth and good
contributions from acquisitions. The Group also delivered substantial
development success, especially in the second half of the year.
While as always risks remain, the current business outlook is on the whole
positive and we enter 2006 with good momentum. A gradual pick-up in European
economies seems broadly under way, which if maintained should bring good
benefits. In the US , while housing may moderate at strong levels,
non-residential construction should continue to recover and highway markets are
underpinned by passage of the new Highway Bill. With a continuing focus on
operational effectiveness and ongoing acquisition benefits, we look to 2006 with
confidence.'
Announced Tuesday, 7th March 2006
RESULTS
HIGHLIGHTS
CRH continued to move forward on many fronts in 2005, once again producing new
record sales and profits; a combination of strong underlying organic growth and
good contributions from acquisitions. We also delivered substantial development
success particularly in the second half of the year.
Despite heightened awareness of the budget and trade deficits, the devastating
impact of Hurricane Katrina which decimated New Orleans and ongoing national
security costs, the United States economy continued to grow relatively robustly
in 2005. In contrast, while activity in some European countries picked up
somewhat, overall Eurozone growth was still disappointing, with continuing
weakness in the Netherlands and Germany . Energy prices rose further, but our
businesses coped well with this challenge. The US Dollar stabilised, leading to
minimal overall currency impact relative to the previous year.
The results highlights for 2005, reported under International Financial
Reporting Standards (IFRS), are set out below. The results reflect the
proportionate consolidation of joint ventures in the Group's income statement,
cash flow statement and balance sheet while the Group's share of profit after
tax of associates is included as a single line item in arriving at Group profit
before tax.
• Sales: euro 14,449 million, up 13%
• Operating profit*: euro 1,392 million, up 14%
• Profit before tax: euro 1,279 million, up 16%
• Basic earnings per share: 186.7c, up 14%
• Cash earnings per share: 292.5c, up 12%
* Before profit on disposal of fixed assets.
Note 5 on page 16 analyses the key components of 2005 performance. All 2004
figures presented for comparative purposes in this Preliminary Results
Announcement are restated in accordance with IFRS and accordingly the profit
numbers for both 2004 and 2005 do not include any charge for goodwill
amortisation. Under IFRS, amortisation of intangible assets amounted to euro
9.1 million (2004: euro 4.1 million).
DIVIDENDS
The Board is recommending a final dividend of 27.75c per share, an increase of
18.6% on the 2004 final dividend of 23.4c. This gives a total dividend for the
year of 39.0c, an increase of 18.2%, representing the twenty-second consecutive
year of dividend growth. It is proposed to pay the final dividend on 8th May
2006 to shareholders registered at the close of business on 17th March 2006.
A scrip dividend alternative is being offered to shareholders.
Segment Review
EUROPE - MATERIALS
Analysis of change
Total Acquisitions
euro million 2005 2004 change Exchange 2004 2005 Organic
Sales 2,646 2,307 +339 +28 +107 +24 +180
% change +15% +1% +5% +1% +8%
Operating profit* 377 320 +57 +4 +17 +3 +33
% change +18% +1% +5% +1% +11%
Margin 14.2% 13.9%
* Operating profit is before profit on disposal of fixed assets.
Europe Materials benefited from generally improved market conditions in all
major regions and delivered an 18% increase in operating profit.
Ireland : 2005 construction output on the island increased by approximately 5%.
The housing sector remained the main driver in the Republic of Ireland with
completions ahead of last year at approximately 81,000 units. The National
Development Plan continued to deliver road construction activity and the
commercial and industrial sectors improved with the sustained growth in the
economy. In Northern Ireland , the commercial and public sectors were very
strong although this was partly offset by a decline in housing activity due to
delays in the planning process. Despite very competitive markets, it was another
good year for CRH in Ireland with an increase of approximately 5% in our total
cement volumes and profits ahead of 2004.
Finland/Baltics: After a flat start to the year, construction activity in
Finland recovered in the second half resulting in overall growth of
approximately 3%. This was evident across all sectors of the market with our
cement volumes also exceeding 2004 levels by approximately 3%. The Baltic
region, including St. Petersburg , enjoyed strong growth. Profits for the year
advanced due to increased second half demand, better margins and tight cost
control.
Poland/Ukraine: The extended winter in Poland reduced sales of all products at
the start of the year; however, cement demand in the second half proved
exceptionally strong leaving cement volumes just ahead of 2004 by year-end. Our
aggregates and blacktop businesses benefited most from increased road building
activity. Readymixed concrete and concrete pavers experienced higher demand
while sales volumes in aerated concrete and lime were lower than in 2004.
Overall, Polish profits improved. In Ukraine , cement sales increased
significantly resulting in a substantial profit increase.
Switzerland : Construction output increased with growth in housing and
continuing good infrastructure spend more than compensating for modest declines
in other sectors. Our aggregates operations performed well while our cement
operations enjoyed a volume increase of approximately 6%. Despite strong
competition, profit performance was in line with the high level of 2004. This
was due to overall efficiency improvements and greater use of alternative fuels
in the Wildegg cement plant.
Iberia : In Spain , the residential market was the main driver for our
readymixed concrete businesses, together with strong infrastructural investment
in the Madrid and Catalonia markets. Sales and profits were ahead of 2004. In
Portugal , construction output moderated in the second half of the year due to
reduced housing activity and constraints on public expenditure. Cement volumes
at our joint venture Secil, in which we acquired a 49% stake in June 2004,
showed a slight reduction on full-year 2004 levels. Higher input costs were
offset by good cost control and pricing discipline in our main regional markets.
Overall the Secil group performed in line with expectations.
EUROPE - PRODUCTS
Analysis of change
Total Acquisitions Re-org.
euro million 2005 2004 change Exchange 2004 2005 costs Organic
Sales 2,533 2,245 +288 +9 +124 +137 - +18
% change +13% - +6% +6% - +1%
Operating profit* 176 191 -15 - +11 +4 -7 -23
% change -8% - +6% +2% -4% -12%
Margin 6.9% 8.5%
* Operating profit is before profit on disposal of fixed assets and includes
re-organisation costs of euro 10 million (2004: euro 3 million).
Our Products operations faced generally subdued markets and trading conditions
throughout 2005 and operating profit fell, largely due to a sharp decline in
results from our Insulation activities.
Concrete Products: The group reported similar profits with contributions from
acquisitions offsetting heritage declines in challenging markets. In
Architectural Products (pavers, tiles and blocks), our Dutch and Belgian
businesses faced tough competition due to market over-capacity and downward
price pressure. In Germany , lower volumes and higher raw material costs led to
a decline in profitability. However, our business in Slovakia performed ahead
of expectations and profits advanced. A softening housing market adversely
impacted our results in the UK . Stradal, the leading landscaping and
infrastructural products business in France acquired in August, performed in
line with expectations. In Structural Products (floor & wall elements, beams,
vaults and drainage products), our Belgian operations turned in an excellent
performance with synergies being realised from recent acquisitions. The
businesses in France and Poland performed strongly with robust markets and
benefits from cost-cutting actions. Dutch operations performed in line with 2004
against a weak commercial backdrop. Our Danish businesses grew strongly and
profits were well up on 2004. Sales and profits from our Sand-Lime Brick
business in the Netherlands advanced with the upturn in housing. However,
trading conditions for our 45% Cementbouw Joint Venture in materials trading and
readymixed concrete in the Netherlands remained tough and its profits declined.
Clay Products: Brick industry volumes in the UK continued to decline due to
falls in both the new residential and RMI sectors while energy prices increased
significantly, particularly towards the end of the year. Nevertheless, profits
remained at similar levels to last year supported by strong pricing, improved
factory and energy efficiencies and good cost control. Overall profitability in
our Mainland Europe activities in the Netherlands , Belgium , Germany and Poland
remained stable despite higher energy costs.
Building Products: This group now comprises four product segments: Insulation,
Fencing & Security, Daylight & Ventilation and Construction Accessories. Our
Insulation operations suffered from severe volatility in energy-related input
costs in the first half of the year and, despite making good progress with
restructuring initiatives and delivering a more stable second-half performance,
profits declined sharply. Fencing & Security had another year of progress with a
strong performance in the Netherlands and continuing good UK results more than
offsetting fierce competitive pressure in Germany . Daylight & Ventilation
faced strong competition in both Germany and the Netherlands but benefited from
the February acquisition of the Laubeuf group which added to market positions in
France and Belgium . Construction Accessories heritage operations delivered
higher profits, successfully passing on steel price increases. Acquisitions in
Switzerland in June and in France/Germany in October contributed strongly to
profits.
EUROPE - DISTRIBUTION
Analysis of change
Total Acquisitions Re-org.
euro million 2005 2004 change Exchange 2004 2005 costs Organic
Sales 2,193 1,904 +289 +2 +186 +70 - +31
% change +15% - +10% +3% - +2%
Operating profit* 123 121 +2 - +5 - - -3
% change +2% - +4% - - -2%
Margin 5.6% 6.4%
* Operating profit is before profit on disposal of fixed assets. Operating
profit relating to 2004 acquisitions is after euro 3 million of integration
costs. Operating profit includes re-organisation costs related to ongoing
operations of euro 2 million (2004: euro 2 million).
Overall, operating profit in Europe Distribution was similar to 2004. Continued
subdued Dutch retail demand and poor weather early in the year led to a slight
decline in organic profits. This was more than offset by contributions from
acquisitions.
DIY: Reduced consumer confidence led to generally weak retail sales resulting in
a slow-moving Benelux market. With its extensive network throughout the
Netherlands and growing presence in Belgium , our DIY business had another
satisfactory year, although profits were somewhat below a record 2004. Our joint
venture in Portugal delivered a good advance in sales supported by the opening
of five new stores, bringing the total network to 21.
Builders Merchants: Although the number of new house completions increased, our
Dutch general builders merchants business faced increased competition. However,
rigorous cost control and benefits from 2004 acquisition activity resulted in a
profit increase, despite restructuring costs. Our businesses in Ile-de-France
had an improved year while the Doras joint venture made further progress in
lacklustre markets in the Burgundy and Franche-Comte regions. Swiss operations
benefited from good market conditions and, helped by the positive impact of
internal improvement programmes, delivered an excellent year with further
progress in sales and profits. The acquisition of Quester in Austria was
completed in mid-October and its post-acquisition performance had only minimal
impact on the 2005 outcome.
In late December, the group acquired a 47.8% stake in BauKing, a leading
builders merchant and DIY operator in northern Germany . Given the timing of
this transaction, no sales or profits for BauKing are included in our 2005
figures.
AMERICAS - MATERIALS Analysis of change
Total Acquisitions
euro million 2005 2004 change Exchange 2004 2005 Organic
Sales 3,165 2,823 +342 - +54 +109 +179
% change +12% - +2% +4% +6%
Operating profit* 328 274 +54 - +6 +8 +40
% change +20% - +2% +3% +15%
Margin 10.4% 9.7%
* Operating profit is before profit on disposal of fixed assets.
Another year of rapidly escalating energy costs created a challenging
environment for our operations. Bitumen costs increased by 13%; energy used at
our asphalt plants, consisting of fuel oil, recycled oil and natural gas, had a
composite cost increase of 25%, while diesel fuel and gasoline used to power our
mobile fleet increased by 37%. We achieved significant success in recovering
these higher costs with strong price improvements and delivered good organic
growth and a welcome improvement in operating profit and margin.
Highway markets were generally favourable with increases in Federal and State
spending. However, the strong product price increases somewhat constrained the
volume of asphalt paving work available in the final quarter. The Federal
Highway Bill, SAFETEA-LU, was signed by President Bush in August but came too
late to impact 2005 activity levels. Residential markets remained strong, buoyed
by low interest rates, while non-residential construction continued to improve.
Total volumes, including acquisition effects, increased 3% in aggregates, 6% in
readymixed concrete and 1% in asphalt. Overall prices increased 7% in
aggregates, 9% in readymixed concrete and 11% in asphalt, reflecting the
successful effort to recover higher energy costs. However, the higher prices,
combined with cement shortages in some western markets late in the year hampered
heritage demand, with flat volumes in aggregates and readymixed concrete and a
3% decline in asphalt.
New England: New Hampshire and Vermont enjoyed better trading in improving
markets. These gains were partially offset by declines in Maine and Connecticut
where volumes were stable but price increases did not fully recover sharply
higher input costs. Massachusetts performed well with a solid highway programme,
the benefit of which was partially offset by higher energy costs.
New York/New Jersey: Our New York/New Jersey businesses saw improved results
compared with 2004 as the Gallo acquisition was integrated with heritage
operations in the New York metro area. Significant price increases for all
products did not fully offset higher energy costs. In Upstate New York, our
Albany operations increased profits in good markets while Rochester results
declined once again, as the market continued to contract, with many large local
employers continuing to scale back their activities.
Central: Overall operating profit increased in the region. West Virginia had a
strong year benefiting from good highway markets and success in recovering
higher input costs. Michigan saw some improvement, but our primary highway
market remains depressed with both state and private markets continuing to
deteriorate. Ohio benefited from steady markets and the integration of recent
acquisitions while Pennsylvania and Delaware improved due to management action
in generating cost efficiencies. Mountain Companies, which was acquired in late
October, had a modest impact on overall profitability in the year.
West: Strong local economies and exposure to the housing market combined to
deliver an outstanding year. Once again, Utah and Idaho saw significant profit
gains as our operations benefited from buoyant markets for all products. In
Washington , results improved despite increasing competition. Our Iowa
operations had another good year. Good progress was also made in Wyoming ,
Montana , South Dakota , Colorado and New Mexico .
AMERICAS - PRODUCTS Analysis of change
Total Acquisitions
euro million 2005 2004 change Exchange 2004 2005 Organic
Sales 2,756 2,462 +294 +11 +58 +58 +167
% change +12% +1% +2% +2 % +7%
Operating profit* 308 251 +57 +2 +2 - +53
% change +23% +1% +1% - +21%
Margin 11.2% 10.2%
* Operating profit is before profit on disposal of fixed assets.
Despite the challenge of rising input costs, particularly cement, energy and
petroleum-based materials, our three products businesses reported healthy
increases in sales and operating profit. Internal initiatives to manage costs
and prices, combined with strong residential activity and a continuing recovery
in the non-residential building sector, contributed to growth and improved
performance.
Architectural Products (APG): Despite higher energy, transport and raw material
prices, and some regional softness in RMI sector demand, APG achieved good
operational improvements along with targeted price increases which, with the
benefit of acquisition contributions, delivered double-digit percentage growth
in sales and operating profit for the year. The West and South regions performed
particularly well and clay brick producer Glen-Gery also advanced, although the
impact of higher second-half natural gas costs somewhat eroded its strong
first-half gains.
Precast: Continued strength in the residential construction sector, together
with recovery in non-residential and modest improvement in telecommunications
construction, resulted in record volumes from our legacy operations. The
combination of cost control, product mix and a disciplined pricing policy
resulted in good margin improvement and record profits for the group. Backlog
has increased both in volume and margin terms compared with the same time last
year, setting the foundation for continued progress in 2006.
Glass: The group achieved another year of strong organic sales and profit growth
despite only modest improvements in a number of our markets. Robust demand for
high-performance, solar-control insulating glass products provided the group
with further gains in market share in this higher-margin segment. Our
hurricane-resistant product StormGlass(R) also achieved record sales following
adoption of more demanding building codes along the Atlantic and Gulf coasts.
AMERICAS - DISTRIBUTION Analysis of change
Total Acquisitions
euro million 2005 2004 change Exchange 2004 2005 Organic
Sales 1,156 1,014 +142 - +7 +50 +85
% change + 14% - +1% +5% +8%
Operating profit* 80 63 +17 - +1 +3 +13
% change + 27% - +1% +5% +21%
Margin 7.0% 6.2%
* Operating profit is before profit on disposal of fixed assets.
As in the latter months of 2004, our Distribution operations benefited
substantially in the first half of 2005 from significant repair work in Florida
in the aftermath of the devastating 2004 hurricanes. This additional Florida
demand moderated somewhat through the second half of 2005 and the late 2004
gains arising from steep price increases for many of the products handled by
these businesses were not repeated. Despite the tougher second-half
comparatives, our Distribution operations delivered further organic growth
helped by robust markets in southern California and Hawaii . It also benefited
from good acquisition contributions and the significant expansion of its
Interior Products operations (gypsum wallboard, steel studs and acoustical
ceiling systems). As a result, full-year operating profit from Americas
Distribution advanced strongly with a further healthy improvement in overall
operating margin.
FINANCE AND TAX
The higher interest charge in 2005 principally reflects the impact of 2004 and
2005 acquisitions. EBITDA interest cover for the year, including share of joint
ventures, was a very comfortable 12.7 times (2004: 12.3 times). Profit after
tax from associates of euro 25.9 million (2004: euro 19.4 million) increased
principally due to an improved performance in our cement associate in Israel and
from our investments in distribution in the Netherlands and France . The tax
charge at 21.8% of Group profit before tax, excluding share of associates'
after-tax profits, was similar to 2004 (21.4%).
After three years of decline in the average US Dollar exchange rate versus the
euro, the average rate of 1.2438 in 2005 was little changed compared with 2004
(1.2439). Average exchange rates for the Group's other major operating
currencies also showed little change with the exception of the Polish Zloty and
the Canadian Dollar, which were respectively 12% and 7% stronger versus the
euro. As a result, after three consecutive years of significant adverse
translation effects on profit before tax, the Group benefited in 2005 from a
modest positive impact of euro 4 million.
Net debt increased by just euro 690 million despite a total spend of euro 1,950
million on acquisitions, investments and capital projects and a euro 165 million
negative translation impact mainly due to the stronger US Dollar. Net debt at
year-end 2005 amounted to euro 3,448 million (2004: euro 2,758 million). The
favourable euro 413 million translation impact on total equity was principally
due to the effect of the stronger US Dollar.
DEVELOPMENT
2005 was a year of considerable success on the development front with total
activity of approximately euro 1.45 billion. This involved value-enhancing
acquisitions across all segments together with a number of major capital
projects. These will add to the future performance and growth of the Group, and
once again demonstrate the success of CRH's well-proven development strategy.
Europe Materials committed euro 50 million to four add-on deals and two
development capital projects. Just before year-end we acquired control of a
26.3% stake in Corporacion Uniland S.A., a Spanish cement, aggregates and
readymixed concrete producer with interests in Tunisia and South America, for
approximately euro 300 million.
It was a very active year for Europe Products with a total commitment of euro
236 million. This included acquisitions by Concrete Products in Belgium , France
and Denmark , additions to our growing Construction Accessories business in a
number of countries, together with bolt-on transactions in our Clay, Fencing &
Security and Daylight & Ventilation businesses.
We significantly enhanced our Europe Distribution network during 2005 through a
combination of greenfield expansion, add-on acquisitions and its first
acquisitions in Austria and Germany for a total commitment of euro 169 million.
For Americas Materials, in addition to committing some euro 72 million to 17
add-on deals, the highlight was the euro 344 million purchase of Mountain
Companies, an integrated aggregates and asphalt player in Kentucky, West
Virginia and Virginia, and a 50% stake in Bizzack, its heavy construction
affiliate, together with Southern Minnesota Construction.
Americas Products spent a total of euro 206 million, again a combination of
capital projects and add-on acquisitions. The Architectural Products Group was
particularly active completing six transactions, which included a significant
expansion of its growing bagged soil and mulch homecentre business, together
with capital projects aimed at supplying growing demand for pavers, blocks and
bagged stone products.
Americas Distribution invested a total of euro 73 million on the completion of
eight transactions during the year. Five of these were in the fast-growing
interior products segment with the remaining three in the roofing and siding
segment.
OUTLOOK
CRH delivered a strong profit and development performance in 2005. Key to that
performance was the effective recovery of significant energy cost increases;
this looks likely to continue to be crucial in the year ahead.
The market outlook for Europe Materials in 2006 is broadly positive. While
housing output in Ireland is expected to ease from current record levels, this
is likely to be offset by increased non-residential activity and continued high
levels of infrastructure and public projects. Further growth is forecast for our
Finland and Baltic operations, while prospects for construction activity levels
in Poland are also positive, particularly so for EU-funded infrastructure
projects. The outlook for overall construction activity in Switzerland is stable
although some infrastructure projects in our markets are now complete. In Iberia
, a small decline in Portuguese construction activity seems likely while we
expect activity in Spain to continue at current high levels. Against this
backdrop, and with capital expenditure programmes focused on cost reduction and
productivity improvement beginning to feed through to the bottom line, we look
to further organic growth for Europe Materials in 2006. This, combined with the
benefit of 2005 development initiatives, should deliver another year of
progress.
Forecasts for construction output in the major markets for Europe Products &
Distribution are showing some growth in 2006, with the exception of Germany ,
where no construction recovery is expected before 2007, and the UK where the
housing market has slowed. For the Netherlands , we anticipate a pick-up in the
economy, with continued growth in new housing construction and strengthening
consumer confidence from the low 2005 levels, while Belgium and France should
also advance. We look to an improved performance in our Europe Products
businesses in 2006 with ongoing recovery in Insulation and good benefits from
2005 Concrete and Construction Accessories acquisitions. Europe Distribution is
expected to benefit from improving Dutch consumer confidence, continuing
benefits from internal improvement programmes in our Swiss businesses and recent
acquisitions in Austria and Germany .
The re-authorisation of the Federal Highway funding programme, SAFETEA-LU, and
improving state finances, should lead to strengthening 2006 US highway markets,
the most important sector for our Americas Materials Division representing 65%
of its end-use demand. While housing at 15% of Americas Materials demand is
forecast to soften slightly, it should be more than offset by a continued
recovery in non-residential building markets which represent 20% of demand.
Together these factors should lead to moderate volume growth. Pricing strategy
for this Division will continue to focus on the recovery of higher input costs
and, with benefits from 2005 development activity, we look forward to further
progress in this Division in 2006.
Although some softening in the current strong level of US housing construction
is generally forecast for 2006, good employment levels, strong demographics and
moderate interest rates continue to support underlying demand in this sector.
Non-residential construction, which in real terms is still well below its peak
of the early 2000's, is expected to continue its recovery in 2006. We also
expect our Canadian and South American operations to see further progress.
Against this backdrop we look to a further operating profit advance for our
Products operations and, although its margins may ease from current high levels,
our Distribution business should also deliver improved profits in 2006.
While as always risks remain, the current business outlook is on the whole
positive and we enter 2006 with good momentum. A gradual pick-up in European
economies seems broadly under way, which if maintained should bring good
benefits. In the US , while housing may moderate at strong levels,
non-residential construction should continue to recover and highway markets are
underpinned by passage of the new Highway Bill. With a continuing focus on
operational effectiveness and ongoing acquisition benefits, we look to 2006 with
confidence.
******
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 results announcement and other factors
discussed in our Annual Report on Form 20-F filed with the SEC.
GROUP INCOME STATEMENT
For the year ended 31st December 2005
2005 2004
euro m euro m
Revenue 14,449.3 12,754.5
Cost of sales (9,901.7) (8,717.4)
Gross profit 4,547.6 4,037.1
Operating costs (3,155.3) (2,816.9)
Group operating profit 1,392.3 1,220.2
Profit on disposal of fixed assets 19.8 10.8
Profit before finance costs 1,412.1 1,231.0
Finance costs (297.4) (264.3)
Finance revenue 138.3 117.9
Group share of associates' profit after tax 25.9 19.4
Profit before tax 1,278.9 1,104.0
Income tax expense (272.6) (232.2)
Group profit for the financial year 1,006.3 871.8
Profit attributable to:
Equity holders of the Company 997.9 866.1
Minority interest 8.4 5.7
Group profit for the financial year 1,006.3 871.8
Earnings per Ordinary Share
Basic 186.7c 163.6c
Diluted 185.2c 162.7c
Cash earnings per Ordinary Share 292.5c 261.8c
GROUP BALANCE SHEET
As at 31st December 2005
2005 2004
ASSETS euro m euro m
Non-current assets
Property, plant and equipment 6,823.5 5,830.6
Intangible assets 2,252.5 1,774.1
Investments in associates 527.6 178.8
Derivative financial instruments 154.8 173.2
Other financial assets 106.9 113.2
Deferred income tax assets 466.5 335.3
Total non-current assets 10,331.8 8,405.2
Current assets
Inventories 1,722.6 1,308.9
Trade and other receivables 2,476.4 1,973.1
Derivative financial instruments 30.7 1.1
Liquid investments 342.5 311.7
Cash and cash equivalents 1,148.6 1,072.0
Total current assets 5,720.8 4,666.8
Total assets 16,052.6 13,072.0
EQUITY
Equity share capital 182.3 181.0
Non-equity share capital 1.2 1.2
Share premium account 2,208.3 2,149.3
Other reserves 37.4 23.5
Foreign currency translation reserve 233.5 (179.9)
Retained income 3,532.7 2,770.1
6,195.4 4,945.2
Minority interest 38.3 34.2
Total equity 6,233.7 4,979.4
LIABILITIES
Non-current liabilities
Interest-bearing loans and borrowings 4,524.5 3,802.4
Derivative financial instruments 13.5 51.9
Deferred income tax liabilities 1,184.5 987.4
Trade and other payables 187.6 122.0
Retirement benefit obligations 450.5 349.7
Provisions for liabilities and charges 223.0 182.3
Capital grants 12.1 12.4
Total non-current liabilities 6,595.7 5,508.1
Current liabilities
Trade and other payables 2,254.4 1,742.1
Current income tax liabilities 271.5 284.5
Interest-bearing loans and borrowings 582.3 251.4
Derivative financial instruments 4.6 210.4
Provisions for liabilities and charges 110.4 96.1
Total current liabilities 3,223.2 2,584.5
Total liabilities 9,818.9 8,092.6
Total equity and liabilities 16,052.6 13,072.0
GROUP CASH FLOW STATEMENT
For the year ended 31st December 2005
2005 2004
euro m euro m
Cash flows from operating activities
Group operating profit 1,392.3 1,220.2
Depreciation charge 555.8 515.9
Employee share options expense 13.9 9.7
Amortisation of intangible assets 9.1 4.1
Net movement on provisions 11.8 (12.0)
Increase in working capital (149.4) (78.6)
Amortisation of capital grants (2.0) (2.2)
Other non-cash movements 2.9 (10.3)
Cash generated from operations 1,834.4 1,646.8
Interest paid (including finance leases) (184.0) (156.5)
Income taxes paid:
- Irish corporation tax (13.3) (17.1)
- Overseas corporation tax (246.2) (188.1)
Net cash inflow from operating activities 1,390.9 1,285.1
Cash flows from investing activities
Inflows
Proceeds from disposal of fixed assets 102.8 102.3
Interest received 43.4 22.6
Capital grants received 1.5 0.2
Dividends received from associates 14.2 8.0
161.9 133.1
Outflows
Purchase of property, plant and equipment (652.1) (550.7)
Repayment of capital grants - (0.5)
Acquisition of subsidiaries and joint ventures (808.3) (711.4)
Investments in and advances to associates (298.9) (6.0)
Advances to joint ventures and purchase of trade investments (7.7) (5.0)
Deferred and contingent acquisition consideration paid (45.3) (57.3)
(1,812.3) (1,330.9)
Net cash outflow from investing activities (1,650.4) (1,197.8)
Cash flows from financing activities
Inflows
Proceeds from issue of shares 39.5 36.6
Shares issued to minority interests 0.3 -
Increase in interest-bearing loans and borrowings 796.8 584.2
Increase in finance lease liabilities 6.5 56.2
Net cash movement in derivative financial instruments (102.8) (62.2)
740.3 614.8
Outflows
Expenses paid in respect of share issues (0.2) (0.3)
Increase in liquid investments (15.0) (25.2)
Repayment of interest-bearing loans and borrowings (250.0) (477.8)
Repayment of finance lease liabilities (12.9) (24.4)
Dividends paid to equity holders of the Company (164.2) (119.6)
Dividends paid to minority interests (9.4) (2.6)
(451.7) (649.9)
Net cash inflow / (outflow) from financing activities 288.6 (35.1)
Change in cash and cash equivalents 29.1 52.2
Translation adjustment 47.5 (20.1)
Joint venture becoming an associate - (1.0)
Cash and cash equivalents at beginning of year 1,072.0 1,040.9
Cash and cash equivalents at end of year 1,148.6 1,072.0
GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE
2005 2004
euro m euro m
Items of income/(expense) recognised directly within equity:
Currency translation effects 413.4 (179.9)
Group defined benefit pension obligations:
- Actuarial loss (86.1) (119.2)
- Deferred tax asset 21.7 31.3
Deferred tax asset on employee share schemes 12.3 -
Gains/(losses) relating to cash flow hedges 2.7 (0.3)
Deferred tax liability on cash flow hedges (0.7) -
Net income/(expense) recognised directly within equity 363.3 (268.1)
Group profit for the financial year 1,006.3 871.8
Total recognised income and expense for the year 1,369.6 603.7
Equity holders of the Company 1,360.4 599.8
Minority interest 9.2 3.9
Total recognised income and expense for the year 1,369.6 603.7
GROUP STATEMENT OF CHANGES IN EQUITY
2005 2004
euro m euro m
Total equity at beginning of year 4,979.4 4,447.0
Issue of shares:
- Share options and participation schemes 39.5 36.6
- Issued in lieu of dividends 21.0 36.4
- Expenses in respect of share issues (0.2) (0.3)
Employee share options expense 13.9 9.7
Dividends (185.2) (156.0)
Movement in minority interest 4.1 8.0
Items of income/(expense) recognised directly within equity:
Currency translation effects 413.4 (179.9)
Group defined benefit pension obligations (64.4) (87.9)
Deferred tax asset on employee share schemes 12.3 -
Cash flow hedges 2.0 (0.3)
Profit for the year attributable to equity holders 997.9 866.1
Total equity at end of year 6,233.7 4,979.4
Supplementary Information
1 International Financial Reporting Standards
Basis of preparation
The financial information presented in this report has been prepared in
accordance with the Group's accounting policies under International Financial
Reporting Standards (IFRS). The transition date for implementation of IFRS by
the Group was 1st January 2004. The financial statements for the year ended 31st
December 2004, which were prepared in accordance with generally accepted
accounting practice in the Republic of Ireland (Irish GAAP), have been restated
under IFRS with effect from the transition date.
Full details of the accounting policies adopted by the Group on implementation
of IFRS, and of the impact on the reported results and balance sheet of the
Group of the transition to IFRS, were published on 31st May 2005 and are
available on the Group's website www.crh.com.
Approved IFRS
The Group's accounting policies under IFRS are based on the International
Financial Reporting Standards and Interpretations issued by the International
Accounting Standards Board (IASB) and on International Accounting Standards
(IAS) and Standing Interpretations Committee Interpretations approved by the
predecessor International Accounting Standards Committee that have been
subsequently authorised by the IASB and remain in effect.
2 Translation of Foreign Currencies
This financial information is presented in euro. Results and cash flows of
subsidiaries, joint ventures and associates based in non-euro countries have
been translated into euro at average exchange rates for the period, 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 subsidiaries, joint ventures and associates at average rates, and on
restatement of the opening net assets at closing rates, are dealt with in a
separate translation reserve within equity, net of differences on related
currency borrowings. All other translation differences are taken to the income
statement. Rates used for translation of results and balance sheets into euro
were as follows:
Average Year ended
euro 1 = 2005 2004 2005 2004
US Dollar 1.2438 1.2439 1.1797 1.3621
Pound Sterling 0.6838 0.6787 0.6853 0.7051
Polish Zloty 4.0224 4.5268 3.8600 4.0845
Swiss Franc 1.5483 1.5438 1.5551 1.5429
Argentine Peso 3.6356 3.6572 3.5868 4.0488
3 Analysis of Revenue and Operating Profit by Business
2005 2004
euro m % euro m %
Revenue
Europe Materials 2,646.2 18.3 2,306.8 18.1
Europe Products 2,533.4 17.5 2,245.0 17.6
Europe Distribution 2,192.9 15.2 1,904.1 14.9
Americas Materials 3,164.7 21.9 2,823.2 22.1
Americas Products 2,755.9 19.1 2,461.6 19.3
Americas Distribution 1,156.2 8.0 1,013.8 8.0
14,449.3 100 12,754.5 100
Operating profit
Europe Materials 377.0 27.1 320.2 26.2
Europe Products 175.6 12.6 190.7 15.6
Europe Distribution 123.4 8.9 121.4 9.9
Americas Materials 328.2 23.5 273.9 22.5
Americas Products 307.6 22.1 250.7 20.6
Americas Distribution 80.5 5.8 63.3 5.2
1,392.3 100 1,220.2 100
Profit on disposal of fixed assets
Europe Materials 8.8 0.2
Europe Products 1.8 0.8
Europe Distribution (0.8) (2.2)
Americas Materials 9.7 5.7
Americas Products (0.1) 4.8
Americas Distribution 0.4 1.5
19.8 10.8
Depreciation charge
Europe Materials 129.0 125.5
Europe Products 126.8 114.1
Europe Distribution 31.6 30.0
Americas Materials 164.8 151.3
Americas Products 93.4 86.1
Americas Distribution 10.2 8.9
555.8 515.9
Amortisation of intangible assets
Europe Materials - -
Europe Products 1.5 0.3
Europe Distribution 0.4 0.3
Americas Materials - -
Americas Products 5.8 2.8
Americas Distribution 1.4 0.7
9.1 4.1
4 Geographical Analysis of Revenue and Operating Profit
2005 2004
euro m % euro m %
Revenue
Ireland * 1,164.1 8.1 1,056.2 8.3
Benelux 2,468.6 17.1 2,166.8 17.0
Rest of Europe 3,733.8 25.8 3,221.8 25.2
Americas 7,082.8 49.0 6,309.7 49.5
14,449.3 100 12,754.5 100
Operating profit
Ireland * 148.4 10.7 142.7 11.7
Benelux 186.2 13.3 195.1 16.0
Rest of Europe 340.6 24.5 293.4 24.0
Americas 717.1 51.5 589.0 48.3
1,392.3 100 1,220.2 100
Profit on disposal of fixed assets
Ireland * 8.1 0.6
Benelux 0.4 0.6
Rest of Europe 1.3 (2.4)
Americas 10.0 12.0
19.8 10.8
Depreciation charge
Ireland * 44.5 44.0
Benelux 78.9 75.4
Rest of Europe 164.0 150.2
Americas 268.4 246.3
555.8 515.9
Amortisation of intangible assets
Ireland * - -
Benelux 1.2 0.1
Rest of Europe 0.7 0.5
Americas 7.2 3.5
9.1 4.1
* Total island of Ireland
5 Key Components of 2005 Performance
Operating Profit on Trading Finance Assoc. Pre-tax
Revenue profit disposals profit costs PAT profit
euro million
2004 as reported 12,755 1,220 11 1,231 (146) 19 1,104
Exchange effects 50 6 - 6 (2) - 4
2004 at 2005 rates 12,805 1,226 11 1,237 (148) 19 1,108
Incremental impact in 2005 of:
- 2004 acquisitions 536 42 - 42 (12) - 30
- 2005 acquisitions 448 18 - 18 (14) - 4
Organic 660 106 9 115 15 7 137
2005 as reported 14,449 1,392 20 1,412 (159) 26 1,279
% change v. 2004:
As reported 13% 14% 14% 16%
At constant 2005 rates 13% 13% 14% 15%
6 Proportionate Consolidation of Joint Ventures
2005 2004
Group share of: euro m euro m
Revenue 617.8 474.4
Cost of sales (392.8) (301.9)
Gross profit 225.0 172.5
Operating costs (143.6) (110.1)
Operating profit 81.4 62.4
Profit on disposal of fixed assets 0.8 1.5
Profit before finance costs 82.2 63.9
Finance costs (net) (13.6) (11.7)
Profit before tax 68.6 52.2
7 Earnings per Ordinary Share
The computation of basic, diluted and cash earnings per share is set out below:
2005 2004
euro m euro m
Profit attributable to equity holders of the Company 997.9 866.1
Preference dividends paid (0.1) (0.1)
Numerator for basic and diluted earnings per Ordinary Share 997.8 866.0
Amortisation of intangibles 9.1 4.1
Depreciation charge 555.8 515.9
Numerator for cash earnings per Ordinary Share 1,562.7 1,386.0
Number Number
Denominator for basic earnings per Ordinary Share of shares of shares
Weighted average number of shares (millions) in issue 534.3 529.5
Effect of dilutive potential shares (share options) 4.4 2.9
Denominator for diluted earnings per Ordinary Share 538.7 532.4
Earnings per Ordinary Share euro cent euro cent
- basic 186.7c 163.6c
- diluted 185.2c 162.7c
Cash earnings per Ordinary Share (i) 292.5c 261.8c
(i) Cash earnings per share, a non-GAAP financial measure, is presented
here for information as management believes it is a useful financial indicator
of a company's ability to generate cash from operations.
8 Net Debt and Finance Costs
2005 2004
Net debt euro m euro m
Non-current assets
Derivative financial instruments 154.8 173.2
Current assets
Derivative financial instruments 30.7 1.1
Liquid investments 342.5 311.7
Cash and cash equivalents 1,148.6 1,072.0
Non-current liabilities
Interest-bearing loans and borrowings (4,524.5) (3,802.4)
Derivative financial instruments (13.5) (51.9)
Current liabilities
Interest-bearing loans and borrowings (582.3) (251.4)
Derivative financial instruments (4.6) (210.4)
Total net debt (3,448.3) (2,758.1)
Including Group share of joint ventures' net debt (271.2) (257.0)
Finance costs (net)
Net Group finance costs on interest-bearing cash and cash
equivalents, loans and borrowings
153.8 139.8
Net pensions financing credit (5.4) (8.5)
Charge to unwind discount on provisions/deferred consideration 15.6 11.3
Net (credit)/charge re change in fair value of derivatives (4.9) 3.8
Total net finance costs 159.1 146.4
Including Group share of joint ventures' net finance costs 13.6 11.7
9 Summarised Cash Flow
The table below summarises the Group's cash flows for the years ended 31st
December 2005 and 31st December 2004.
2005 2004
Inflows euro m euro m
Profit before tax 1,279 1,104
Depreciation 556 516
Amortisation of intangibles 9 4
Proceeds from disposal of fixed assets 103 102
Share issues (net of expenses) 61 73
2,008 1,799
Outflows
Working capital movement 119 78
Capital expenditure 652 551
Acquisitions and investments 1,298 1,019
Dividends 185 156
Tax paid 260 205
Other 19 29
2,533 2,038
Net outflow (525) (239)
Translation adjustment (165) 36
Increase in net debt (690) (203)
10 Other
2005 2004
EBITDA interest cover (times) 12.7 12.3
EBIT interest cover (times) 9.0 8.6
EBITDA = earnings before interest, tax, depreciation and amortisation, excluding
share of joint ventures
EBIT = earnings before interest and tax, excluding share of joint ventures
Interest excludes share of joint ventures
Average shares in issue 534.3m 529.5m
Net dividend per share (euro cent) 39.0c 33.0c
Dividend cover (Earnings per share/Dividend per share) 4.8x 5.0x
Depreciation charge - subsidiaries (euro m) 525.2 494.4
Depreciation charge - share of joint ventures (euro m) 30.6 21.5
Amortisation of intangibles - subsidiaries (euro m) 9.1 4.1
Amortisation of intangibles - share of joint ventures (euro m) - -
Share option expense charged in operating profit (euro m) 13.9 9.7
Market capitalisation at year-end (euro m) 13,327.7 10,492.2
Total equity at year-end (euro m) 6,233.7 4,979.4
Net debt (euro m) 3,448.3 2,758.1
Net debt as a percentage of total equity 55% 55%
Net debt as a percentage of market capitalisation 26% 26%
11 Statutory Accounts
The financial information presented in this report does not represent full
statutory accounts. Full statutory accounts for the year ended 31st December
2005 prepared in accordance with IFRS, 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 2004, prepared in
accordance with Irish GAAP and containing an unqualified audit report, 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
6th March 2006.
13 Annual Report post-out and Annual General Meeting (AGM)
The 2005 Annual Report is expected to be posted to shareholders on Friday, 31st
March 2006 together with details of the Scrip Dividend Offer in respect of the
final 2005 dividend. The 2005 Annual Report will be available to the public from
Monday, 3rd April 2006 at the Company's registered office. The Company's AGM is
scheduled to be held in Jury's Hotel, Ballsbridge, Dublin on Wednesday, 3rd May
2006.
Contact at Dublin 404 1000 (+353 1 404 1000)
Liam O'Mahony Chief Executive
Myles Lee Finance Director
Eimear O'Flynn Head of Investor Relations
Maeve Carton Group Controller
CRH plc, Belgard Castle , Clondalkin, Dublin 22, Ireland TELEPHONE +353.1.404
1000 FAX +353.1.404 1007
E-MAIL mail@crh.com WEBSITE www.crh.com Registered Office, 42 Fitzwilliam
Square , Dublin 2, Ireland
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