Chairman’s AGM updating statement - May 2001
09 May 2001
Annual General Meeting – 9th May 2001
In Ireland, following good volume growth in the first quarter, activity levels in recent weeks have been somewhat subdued reflecting the impact on rural construction of measures to prevent the spread of foot and mouth disease. Infrastructural demand continues to be generally strong. While the land and planning constraints evident during 2000 continue to affect residential construction activity in Dublin, underlying demand in this sector remains good.
In Britain, exceptionally wet weather has had an adverse impact on activity levels in the housing sector, a key market for Ibstock Brick. As a result brick volumes year to date are down. Price increases however have held. In Northern Ireland, our Farrans operation continues to benefit from PFI (Private Finance Initiative) driven demand.
In Mainland Europe, weather has also been poor and trading patterns have been mixed. Year to date demand in our Materials activities in Poland has been slower than last year although we have been benefiting from better prices. Finland has also started slower, but activity levels in Spain continue strong. In the Products and Distribution division, our distribution activities had a good start to the year. Clay products demand in Germany continues weak and conditions in the Dutch clay and concrete markets remain competitive. Both the Materials and Distribution operations of our newly acquired Jura business in Switzerland are performing in line with expectations.
In North America, our Materials operations have experienced good bid activity with order backlogs ahead of 2000 both in volumes and margins. Although natural gas, gasoline and diesel prices remain high, our winter-fill bitumen stock building programme - which covers approximately 30% of our annual bitumen requirements - has been completed at prices substantially below last year’s levels. The first-time inclusion of seasonal winter losses for Shelly (acquired in February 2000) and Dolomite (acquired in May 2000) will of course impact the US Materials group outturn in the first half of the year. While order backlogs for our Products and Distribution activities are also strong, mixed weather conditions and economic uncertainty have resulted in some recent delays in order drawdowns.
The 1 for 4 Rights Issue announced in March was extremely well supported by our international shareholder base with an acceptance level of 94.7%. Approximately euro 1.1 billion (net of expenses) was raised, which will back the extensive resources committed by CRH to development and will ensure that the Group is not constrained in its plans to take full advantage of attractive acquisition opportunities as they arise in our various geographic, product and sectoral markets. To date in 2001 we have completed acquisitions totalling over euro 330 million, including the acquisition of Mount Hope Rock Products in the United States which was announced last week.
While economic uncertainties continue with regard to the direction of world markets and as yet the seasonal pick up in activity has not been as rapid as anticipated due to the factors already outlined, we nevertheless expect overall improvements in 2001 from our existing businesses and from the full year impact of businesses acquired during 2000. With these improvements, together with the results of acquisitions completed to date this year and with the benefits of the recent Rights Issue, we look forward to a year of further progress in 2001.