CRH Profit Falls on Weak European Confidence; CEO to Retire
CRH Plc (CRH), the world’s second-largest maker of construction materials, posted a 5 percent decline in full-year earnings amid weak consumer demand in the euro-region.
Underlying like-for-like sales fell 2 percent, as a 3 percent increase in the Americas was outweighed by a 6 percent decline for European operations, the Dublin-based company said today in a statement. Pretax profit declined 5.2 percent to 674 million euros ($881 million). Chief Executive Officer Myles Lee said he would retire at the end of the year after 31 years at the company.
European operations “had to contend with weakening consumer and investor confidence within the Eurozone,” said Lee. Business in the Americas was “helped by a strong recovery in residential construction and improving overall economic activity in the United States.”
CRH operates builders merchants and do-it-yourself stores as well as manufacturing cement, aggregates and concrete products for the construction industry. Builders broke ground on 613,000 houses at an annualized rate last month, the most since July 2008 and up 0.8 percent from December, U.S. Commerce Department figures showed last week.
This year will be “another challenging year” in Europe, said the company, even as the European Central Bank’s efforts to support peripheral Euro area economies has created a more stable financial climate. Improvements in the U.S. business will “outweigh” pressures in Europe, CRH said.
Lee, who became finance director in November 2003 and CEO in January 2009, will leave at the age of 60, the company said. Chairman Nicky Hartery said the board has appointed a committee to search for his successor.
“We would expect that Albert Manifold, chief operating officer, would be a likely successor to Myles Lee and that this would be perceived positively by the market,” analysts at NCB Stockbrokers wrote in a note to clients today.
CRH dropped as much as 2.7 percent in London trading, and traded up 1.7 percent at 14.45 pounds at 2:30 p.m., giving the company a market value of 10.5 billion pounds. CRH rose 3 percent to 16.72 euros in Dublin.
“His tenure focused on strengthening CRH’s balance sheet, which leaves it in excellent shape for his successor,” said David Holohan, an analyst at Merrion Capital in Dublin who has a sell recommendation on the stock. “Given that they are giving a year’s notice of the retirement, the market reaction should be limited.”
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