CRH profits to drop slightly in first half of the year

CRH group profits for the first half of the year will he slightly down against 1996 but market analysts say there will be no change to profit forecast for the full year.

Chairman Mr Tony Barry told the CRH annual meeting in Dublin yesterday that group profits for the half year would be "slightly lower" than in 1996. This was because of the higher financing costs of 1996 acquisitions and the seasonal North American trading pattern.

The profitability of the major, 1996 acquisitions, Parson, Allied and Tilcon in the US, was "significantly skewed" towards the second half of the year, he said.

Over the full year the expectation was for further growth.

Analyst Mr John Conroy of NCB said the chairman's statement was "well up to expectations".

CRH made pre tax profits of £193.4 million last year, an increase of 20.5 per cent on 1995. The Republic was the most important market in profit terms, accounting for 27.6 per cent of trading profits.

North America accounted for 44.2 per cent of trading profit and mainland Europe 20.9 per cent. Britain and Northern Ireland accounted for 7.3 per cent.

The group believes growth in the Irish construction industry this year will be in double digit figures if trends continue.

Mr Barry told the meeting that growth in construction in Ireland was exceeding earlier expectations with particularly strong demand from the residential, commercial and industrial sectors.

In Britain trading in recent weeks had provided stronger evidence of improving demand in the group's product areas.

"With more normal winter conditions than in 1996, our operations in the Benelux have got off to a strong start," Mr Barry said. "Markets in Germany and France remain difficult while in Spain price weakness persists, despite stronger demand."

He reported good progress on the sale of surplus assets in Tilcon with over $30 million (£19.85 million) of the planned $50 million (£33.1 million) disposals already achieved.

"With all this good start across all regions and a favourable full year outlook we look forward to a further year of growth in 1997," Mr Barry said.

Speaking after the meeting Mr Barry said the Dublin housing market needed more developed land to be made available in order to create competition and keep house prices down.

The meeting was well attended and there were a number of questions from shareholders concerning environmental issues. Mr Barry said such questions were better dealt with by the regional managers concerned.