Trading update statement - November 2001
01 November 2001
CRH plc, the international building materials group, today issued the following trading statement which updates the statement on outlook for 2001 which was included in the Interim Report dated September 4, 2001.
Seven weeks have passed since the appalling terrorist attacks in New York, Washington and Pennsylvania and, while CRH’s Materials and Distribution operations in the New York metropolitan area suffered major disruption in the immediate aftermath of the attacks, our other U.S. operations were not significantly affected. However in more recent weeks, due to the impact of declining consumer confidence, increasing job-layoffs and security fears, there has been a softening of demand patterns, particularly for those of our U.S. operations exposed to the residential and non-residential construction sectors. Our European operations have also been impacted and the negative trends already identified in the Interim Report have gathered pace. On the positive side however, energy costs remain low and US infrastructure demand, underpinned by TEA 21, remains healthy. We are continuing our ongoing process of ensuring our businesses are efficient and that costs are reduced. In this context we have decided to close a further clay products facility in Germany.
While the net effect of the above factors is adverse, we expect that 2001 profit before tax, and after goodwill amortisation, will be in the range €760 million to €790 million compared with the record 2000 out-turn of €697 million.
For 2002 there have been downward reductions in forecast GDP growth rates for almost all of the world’s economies. While strong infrastructural programmes will underpin construction activity in a number of CRH’s major markets and may well be boosted by further employment-generating public spending measures, these public programmes may not compensate fully for weakness in private sector construction despite recent reductions in interest rates. Thus, while the medium term impact of the recent terrorist action and ensuing events is impossible to quantify precisely, we anticipate continued challenging trading conditions in the first half of 2002.
Commenting on recent events, Mr. Liam O’Mahony, CRH Group Chief Executive said today; "Despite the current difficult and uncertain outlook we are confident that CRH’s balanced geographic, sectoral and product spread will underpin our performance and form a sound basis for future progress. We are taking all necessary cost reduction and efficiency generating actions in response to the anticipated trading environment. Our cash flow and balance sheet remain strong and with comfortable interest cover we remain alert for the development opportunities that are inevitably generated by uncertain markets".
Contact CRH at Dublin 404 1000 (+353 1 404 1000)
|Liam O’Mahony, ||Chief Executive |
|Harry Sheridan, ||Finance Director |
|Myles Lee, ||General Manager-Finance |