Final Results
CRH PLC
02 March 2004
2003 RESULTS
Year ended 31st December 2003
% change in 2003
2003 2002 In constant
currency **
euro m euro m Reported
Sales 11,080 10,794 +3% +15%
Operating profit * 1,045 1,048 - % +12%
Profit before tax 864 856 +1% +12%
euro cent euro cent
Earnings per share - before goodwill 136.2 132.5 +3% +13%
Earnings per share - after goodwill 121.9 119.2 +2% +13%
Cash earnings per share 223.4 219.8 + 2% +13%
Dividend per share 28.1 25.4 +11% +11%
* Including share of joint ventures and associates but before goodwill amortisation and profit on sale of fixed
assets.
** These percentages compare 2003 results with 2002 figures restated at average 2003 exchange rates.
• Record results in 2003 despite adverse currency translation effect.
• Total 2003 construction output in Ireland was similar to 2002. Sales increased by 2% while operating profit of
euro 130 million was broadly in line with 2002 levels.
• Operating profit in Britain and Northern Ireland increased by 13% in local currency terms, while reported
profit of euro 57 million was 3% ahead of last year.
• In Mainland Europe, construction output remained relatively flat in most markets other than Spain, which
continued to grow strongly. In the Materials Division, operating profits rose by 6% to euro 133 million. Profits
for the legacy Products & Distribution businesses improved and, with the benefit of significant current and
prior year acquisition activity, operating profits increased by 55% to euro 166 million.
• In the Americas Materials Division, improved pricing and the incremental impact of 2002 and 2003 acquisitions
offset the combined effect of continued high energy costs and record wet weather in key regions to give
operating profit up 4% in US Dollar terms. With the benefit of significant acquisitions, the Products &
Distribution Division achieved a 10% increase in US Dollar operating profits in spite of the wet spring and a
weak commercial construction sector. While overall results for the Americas were 7% ahead in US Dollar terms,
operating profits translated into euro were adversely affected by a 16% strengthening of the euro versus the US
Dollar, and at euro 559 million were 11% lower than 2002.
• Total acquisition and investment activity spend amounted to euro 1.6 billion on 41 deals, matching the record
spend in 2000.
Liam O'Mahony, Chief Executive, said today:
'In 2003 the CRH team worldwide responded strongly to tough and changing
circumstances and again delivered performance and growth. Group profits advanced
for the eleventh consecutive year. While risks and uncertainties remain and
economic growth in Europe is generally subdued, the economy in the US is
recovering and we are poised to move forward as markets improve. We continue to
focus relentlessly on cost effectiveness and operational performance and,
although reported 2004 profits are likely to be impacted by the weakness of the
US Dollar, 2003 acquisitions should contribute strongly. Our acquisition
programme and overall strategy continue to deliver and with robust cash flow and
comfortable interest cover we have substantial capacity to capitalise on
opportunities as they arise. We face 2004 with confidence.'
Announced Tuesday, 2nd March 2004
RESULTS
Highlights
The results highlights for 2003 are set out below.
• Sales: euro 11,080 million, up 3% (up 15% in constant currency terms)
• Operating profit*: euro 1,045 million, in line with 2002 (up 12% in
constant currency terms)
• Profit before tax: euro 864 million, up 1% (up 12% in constant currency
terms)
• Basic earnings per share before goodwill amortisation: 136.2c, up 3% (up
13% in constant currency terms)
• Cash earnings per share: 223.4c, up 2% (up 13% in constant currency terms)
* Operating profit including share of joint ventures and associates but
before goodwill amortisation and profit on sale of fixed assets.
A major feature of 2003 was the ongoing decline of the US Dollar, with the euro
on average some 16% stronger versus the Dollar compared with 2002. The euro also
strengthened versus our other major operating currencies during 2003, being on
average some 12% stronger versus the Polish Zloty, 9% stronger versus Sterling
and 4% stronger relative to the Swiss Franc. The combined impact of these
changes resulted in a net negative translation impact of euro 1,150 million on
sales, euro 112 million at operating profit level and euro 86 million on profit
before tax. The percentage changes at constant currency shown above compare 2003
results with 2002 figures restated at 2003 average rates.
The average number of shares in issue increased by 0.6% to 525.7 million (2002:
522.8 million).
Goodwill amortisation (including share of joint ventures and associates)
amounted to euro 75.5 million (2002: euro 69.6 million). Spending on
acquisitions and investments in 2003 amounted to euro 1.6 billion (2002: euro
1.0 billion). The Group profit and loss account on page 10 separately discloses
the impact of acquisitions made during 2003.
Dividends
The Board is recommending a final dividend of 19.90c per share, an increase of
10.7% on the 2002 final dividend of 17.97c. This makes a total dividend for the
year of 28.1c, an increase of 10.6%.
It is proposed to pay the final dividend on 10th May 2004 to shareholders
registered at close of business on 12th March 2004. A scrip dividend alternative
is being offered to shareholders.
Development
On 3rd October 2003, CRH completed its largest ever deal, the acquisition of the
distribution and building products operations of Cementbouw Handel & Industrie
together with 45% of Cementbouw's materials operations, at a total cost of euro
0.7 billion. 2003 also saw continued progress with our add-on development
strategy with 40 other individual deals spread across all regions and Divisions.
Total acquisition and investment spend amounted to euro 1.6 billion.
The Europe Materials Division continued a series of small bolt-on acquisitions
in Finland. 2003 saw the Division's entry into the Polish lime market through
the acquisition of 86% of the State-owned Trzuskawica Lime Company in February,
followed later in the year by Kujawy Lime. Total spend amounted to euro 58
million.
The Europe Products & Distribution Division was very active on the development
front during 2003, spending a record euro 1.0 billion, including the euro 0.7
billion Cementbouw deal. The Division concluded 14 further deals in six
countries.
The Concrete Products group extended its operations into Slovakia and Denmark
with the acquisition of Premac and Betonelement respectively, while existing
businesses in Belgium, France and Germany were strengthened with bolt-on
acquisitions in each of these countries.
The Building Products group added a new Concrete Accessories platform during
2003 with the acquisition of Plakabeton, a leading European supplier of
metal-based accessories for the construction and precast concrete industries.
The Fencing & Security operations were strengthened by two significant
acquisitions: Adronit, a supplier of industrial fencing and gates in Germany,
and Magnetic Autocontrol, which supplies access control systems throughout
Europe and has sales offices in Asia, Australia and the US. The Insulation group
acquired Unidek, a leading producer of expanded polystyrene insulation products
with factories in the Netherlands and Germany.
In addition to the distribution activities of Cementbouw, which added 54 DIY
stores and 36 merchanting outlets, the Distribution group acquired 3 DIY stores
in the Netherlands in January and added 13 branches in Belgium in April through
the acquisition of Gamma Leuven and the 12 stores previously owned by the Heeren
group. Just before year-end, the Distribution group strengthened its presence in
France by increasing its share in SAMSE, the leading builders merchant in the
Rhone-Alpes region, and by investing with SAMSE in G.Doras, another French
regional merchant.
Another busy development year for the Americas Materials Division saw
significant add-ons to existing operations with a combined spend of euro 320
million on 10 deals. The largest acquisition was S.E. Johnson in Ohio and
Michigan, combined with the subsequent swap of its non-core Indiana assets for
six quarries in the southeastern US. The Division successfully completed 8 other
add-on deals that complement its existing operations and continue its focus on
acquiring strategically located, high quality aggregate reserves.
2003 development activity in the Americas Products & Distribution Division
included 11 deals at a total cost of euro 246 million. The Architectural
Products Group (APG) spent a record euro 187 million on six acquisitions. In
January, APG acquired Northfield Block, with four plants in Chicago, providing a
strong masonry presence in this large market. The Midwest operations were
further complemented by the addition of Bend Industries, with two plants in
eastern Wisconsin. The acquisition of Matt Stone in June represented APG's first
entry into the Florida market. Georgia Masonry, acquired in July, added another
geographic platform to APG. During October, APG added Supreme Block of northern
Virginia and Global Stone, with three facilities in Georgia, Virginia and
Pennsylvania. The Glass Group completed two acquisitions during 2003. In March,
Southwest Aluminum Systems was acquired, establishing an entry position in
architectural aluminium glazing systems which are used to fasten glass into
buildings. In May, April Industries of Quebec was acquired, strengthening the
Glass Group's existing presence in eastern Canada and the northeastern US.
The US Distribution Group added a total of 7 branches in three acquisitions
(Gypsum Products in Colorado, Remodelers Supply (South Side) in Chicago and BASS
Supply of Philadelphia), bringing its network of specialist merchanting branches
to 123 in 27 states.
Finance
Incremental costs of financing 2002 and 2003 acquisition activity were offset by
the interest income generated on our strong free cash flow with the reduction in
total finance costs to euro 118 million (2002: euro 138 million) largely
attributable to favourable exchange translation effects of euro 19 million.
The reduction in the effective tax rate to 25.2% (2002: 26.5%) primarily
reflects the lower proportion of comparatively higher taxed US profits.
Net debt increased by only euro 598 million despite a total spend of euro 2
billion on acquisitions, investments and capital projects, reflecting the
Group's strong cash generation characteristics combined with a favourable
translation adjustment of euro 243 million, primarily as a result of a weaker US
Dollar during 2003. The weaker Dollar was also the principal factor in the
negative translation impact of euro 523 million in shareholders' funds.
The US Dollar 1 billion Global Bond Issue completed in September 2003 and the
Group's comfortable interest and dividend cover together underpin CRH's ability
to continue its ongoing development strategy.
Regional review
REPUBLIC OF IRELAND
Including share of joint ventures Analysis of year-on-year change
Total Acquisitions
euro million 2003 2002 change Exchange 2002 2003 Ongoing
Sales 732 714 +18 - - +2 +16
% change +2% +2%
Operating profit* 130 131 -1 - - - -1
% change -1% -1%
Margin 17.8% 18.3%
* Operating profit is arrived at before goodwill amortisation charges and profit
on sale of fixed assets.
A very strong housing sector, with an estimated record 68,000 house completions
compared with 57,700 in 2002, resulted in volume increases of over 10% for our
cement and concrete products. Road construction work under the National
Development Plan was strong in the first half but, as expected, was weak in the
second half due to a decline in new start-up work resulting in full year volume
declines for stone and blacktop. The commercial and industrial sectors had
another poor year with an overhang of office and industrial buildings continuing
to curtail new-build. Total 2003 construction output and our operating profits
were broadly similar to 2002 levels.
BRITAIN AND NORTHERN IRELAND
Including share of joint Analysis of year-on-year change
ventures
Acquisitions/
Total disposals
euro million 2003 2002 change Exchange 2002 2003 Ongoing
Sales 692 699 -7 -59 +4 -6 +54
% change -1% -9% +1% -1% +8%
Operating profit* 57 56 +1 -5 +2 - +4
% change +3% -9% +4% +8%
Margin 8.3% 8.0%
* Operating profit is arrived at before goodwill amortisation charges and profit
on sale of fixed assets.
UK housing starts were again up on the previous year, as were industry brick
deliveries. Ibstock's brick volumes were up 1% on 2002, below the market due to
a combination of kiln rebuilds and changed product mix. However, margins moved
upward with the benefit of price improvements. Our concrete, insulation and
fencing operations also performed satisfactorily.
In Northern Ireland, construction activity was similar to 2002. The year started
poorly for our Materials Division operations, but the second half was strong
particularly in the housing and road maintenance sectors. Our construction
business had a good year, benefiting from a major power plant project and the
busy water treatment sector.
The euro was on average approximately 9% stronger versus Sterling than in 2002
giving rise to an adverse translation impact on operating profit of euro 5
million. However, 13% higher profits in Sterling terms more than offset this,
leaving operating profit in euro terms 3% ahead of 2002.
MAINLAND EUROPE - MATERIALS
Including share of joint ventures Analysis of year-on-year change
Total Acquisitions Re-org.
euro million 2003 2002 change Exchange 2002 2003 costs Organic
Sales 1,007 967 +40 -43 +25 +37 - +21
% change +4% -4% +2% +4% +2%
Operating profit* 133 126 +7 -6 +3 +4 +6 -
% change +6% -5% +3% +3% +5% -
Margin 13.2% 13.0%
* Operating profit is arrived at before goodwill amortisation charges and profit
on sale of fixed assets, and includes re-organisation costs of nil (2002: euro 6
million at 2003 exchange rates).
Following an exceptionally cold first quarter in Northeast Europe, demand
recovered strongly in the second half. With an adverse currency translation
impact of euro 6 million offset by the absence of 2002's Polish rationalisation
charge, and helped by contributions from 2002 and 2003 acquisitions, operating
profits for Mainland Europe Materials were +6% ahead of the 2002 outcome.
Finland/Baltics Overall construction activity in Finland was stable as growth in
housing and infrastructure projects compensated for declines in industrial and
commercial demand. After a very slow weather-impacted first half, volumes in
both cement and readymixed concrete improved significantly in the second half
and profits for the year ended ahead of last year. The Baltic area performed
well in 2003 with particularly strong demand for our products in St. Petersburg
and Estonia.
Poland/Ukraine Our cement operations in Poland offset the first-half activity
setback to end the year with volumes in line with 2002. Concrete products
volumes benefited from stronger demand in the second half of the year but these
markets remain very competitive. Blacktop and aggregates continued to suffer
from the lack of any major programme of investment in infrastructure projects,
particularly in roads. Our two newly-acquired Polish lime businesses performed
well and met expectations. Overall Polish profits were ahead of 2002. In a
competitive Ukrainian market Podilsky Cement achieved strong growth in sales
with operating profits in line with last year.
Switzerland Construction activity varied during the year, with good new
residential activity in the bigger cities compensating for a decline in
commercial and industrial activity. As the major infrastructure projects which
commenced in 2002 were implemented, we enjoyed strong demand for cement and
profits improved.
Spain Construction output grew by 6% largely due to continuing major
infrastructure investment and a strong residential sector. However, margins were
under pressure in competitive markets and profitability was similar to 2002.
Israel The economy was adversely affected by the political situation. Cement
demand in Israel was reduced, but the market in the West Bank and Gaza improved.
Cost reductions and efficiency improvements implemented early in the year
ensured that results were only slightly behind 2002.
MAINLAND EUROPE - PRODUCTS & DISTRIBUTION
Including share of joint ventures Analysis of year-on-year change
Total Acquisitions Re-org.
euro million 2003 2002 change Exch. 2002 2003 costs Organic
Sales 2,636 2,053 +583 -17 +215 +397 - -12
% change +28% -1% +11% +19% -1%
Operating profit* 166 107 +59 - +12 +39 - +8
% change +55% +11% +36% +8%
Margin 6.3% 5.2%
* Operating profit, which also includes share of associates' profit, is
arrived at before goodwill amortisation charges and profit on sale of fixed
assets, and includes re-organisation costs of euro 5 million (2002: euro 5
million).
Construction output in all the Products & Distribution Division's key markets in
Mainland Europe remained depressed. Throughout Europe, activity in new office
and commercial building declined and new housing continued weak. Nevertheless,
2003 saw a strong performance from the Division with sales up 28% and operating
profit 55% ahead. Aided by cost cutting and efficiency programmes, our legacy
businesses improved; the bulk of the advance in sales and profits was due to
2002 and 2003 acquisitions.
The Concrete Products group, which predominantly supplies the new build sector,
experienced difficult markets. In this challenging environment, the group
delivered a good performance, with legacy businesses reporting results just
below 2002 and a strong contribution from 2002 and 2003 acquisitions. Good
progress has been made with the integration of the Cementbouw concrete products
businesses.
For the Clay Products group, the German market remained difficult leading to
further rationalisation measures. In Poland activity was disrupted in early 2003
by the long winter; thereafter recovery was strong and profits for the year
improved. Cementbouw's clay paving and facing brick operations were successfully
integrated with our existing Dutch clay product businesses.
The Insulation group benefited from improvements in its Polish and German
operations and positive contributions from acquisitions in 2002 and 2003, which
were partly offset by a decline in underlying operations in the Benelux.
In the Building Products group, our Fencing & Security business increased
underlying profits while Adronit (acquired March 2003) and Magnetic Autocontrol
(acquired July 2003) contributed positively to results. Daylight & Ventilation
operations had a difficult year with the ongoing decline in the German market
and once-off restructuring costs resulting in lower profits. Plakabeton, the
Belgium-based metal building accessories business acquired in April 2003,
contributed strongly to results.
2003 was an excellent year for the Distribution group in Europe and a strong
advance in sales and operating profit was recorded. Our DIY homecentre
businesses had an exceptional year of progress although retail demand in the
Netherlands slowed in the second half. With the inclusion of the Cementbouw DIY
stores in the Netherlands and the acquisition of stores in the Netherlands and
in Belgium, we consolidated our leading position in the Benelux DIY market. Our
total Benelux network now consists of 130 stores, 116 in the Netherlands and 14
in Belgium. In Portugal, sales and profits of our joint venture again advanced.
Overall, the Builders Merchanting businesses in France, Switzerland and Poland
performed well, while in the Netherlands a strong improvement in profits
reflected both the inclusion of Cementbouw and successful cost reduction
programmes in the legacy businesses.
THE AMERICAS - MATERIALS
Including share of joint Analysis of year-on-year change
ventures
Total Acquisitions
euro million 2003 2002 change Exchange 2002 2003 Organic
Sales 2,831 3,072 -241 -504 +54 +202 +7
% change -8% -16% +2% +6% -%
Operating profit* 291 336 -45 -55 +4 +23 -17
% change -13% -16% +1% +7% -5%
Margin 10.3% 10.9%
* Operating profit is arrived at before goodwill amortisation charges and profit
on sale of fixed assets.
The Materials Division reported a 10% increase in sales and a 4% increase in
operating profits in US Dollar terms. The Division suffered from record wet
weather in the Northeast and Midwest resulting in overall year-on-year declines
of approximately 2% in aggregates, 4% in asphalt and 1% in readymixed concrete
volumes for its heritage operations. On the positive side, the impact of higher
energy costs was largely recovered through improved blacktop pricing and
alternative fuel usage. The net decline in profits from heritage operations was
more than offset by positive incremental contributions from 2002 and 2003
development initiatives.
2003 was a difficult year for the New England operations, with wet weather
further curtailing the short construction season leaving profits just short of
2002 levels. The Vermont paving program was poorly funded as a few large
projects consumed most of the state's highway monies. Our operations in
Massachusetts continued to improve due to strong residential demand and stable
highway markets. Connecticut had a good year resulting from volume growth driven
by buoyant private markets and continued good cost control, and with price
improvements successfully recovering the impact of higher energy costs.
Our New York/New Jersey businesses had a mixed year with overall results behind
2002 levels. This group was particularly hard hit by the harsh winter, a wet
summer/autumn and the early onset of winter, which resulted in increased costs
at our quarries and curtailed shipments. Demand in the greater New York
metropolitan areas remained strong in most of our areas of operation but we were
unable to recover all of the increase in energy costs due to competitive
markets, especially in New Jersey blacktop. Our Upstate New York operations
performed well due to strong volumes and better pricing in mixed markets.
In the Central group, overall operating profits increased in an active
acquisition/integration environment. Despite poor weather and rising energy
costs, the year finished strongly. The Mid-Atlantic operations improved their
performance with strong aggregate sales and better pricing. Ohio and West
Virginia also advanced with a mid-year gas tax increase in Ohio benefiting
highway spending. Michigan operations were disappointing with both poor state
highway funding and weak commercial markets. S.E. Johnson and several add-on
acquisitions were successfully integrated into this regional grouping.
Although trading conditions varied across the West region, which comprises over
270 locations across a wide geographic area covering 12 states west of the
Mississippi River, the integration of recent acquisitions and cost reduction
programmes resulted in higher profits. Markets in southern Idaho and Utah
stabilized in 2003. In eastern Washington, northern Idaho and Montana our
operations suffered from new competitors, continued soft markets and an early
onset of winter weather. Our operations in resort towns in western Colorado
delivered improved profits in the face of weak high-end residential and
commercial markets. The Wyoming and South Dakota businesses enjoyed relatively
stable conditions and had a satisfactory year. Iowa continued to perform well,
despite a competitive readymixed concrete market, with our vertically integrated
materials businesses benefiting from a strong highway programme and stable
private construction markets.
THE AMERICAS - PRODUCTS & DISTRIBUTION
Including share of joint Analysis of year-on-year change
ventures
Total Acquisitions
euro million 2003 2002 change Exchange 2002 2003 Organic
Sales 3,182 3,289 -107 -527 +191 +194 +35
% change -3% -16% +6% +6% +1%
Operating profit* 268 292 -24 -46 +9 +23 -10
% change -8% -16% +3% +8% -3%
Margin 8.4% 8.9%
* Operating profit is arrived at before goodwill amortisation charges and profit
on sale of fixed assets.
During 2003 weak commercial construction markets adversely affected the Products
& Distribution Division's margins while the Division also had to contend with a
rainy spring which particularly impacted operations along the Atlantic Coast. On
the positive side, historically low interest rates boosted both new residential
construction and refinancing activity, raising home repair/remodeling spending,
and the harsh winter aided our residential roof distribution business. Against
this challenging background and with the benefit of significant acquisition
activity, the Division recorded a 16% increase in sales and a 10% increase in
operating profit in US Dollar terms.
Record spring rainfall in the eastern United States and weak commercial building
conditions made for a challenging year for the Architectural Products group
(APG). While underlying profits were lower, the incremental impact of
acquisitions in both 2002 and 2003 resulted in an overall profit advance in US
Dollar terms. Sales and profits in concrete masonry moved modestly ahead due to
focused sales efforts and good cost controls, particularly in the West and
South. Clay brick producer Glen-Gery, however, saw significant sales and profit
declines in very competitive markets. Belgard(R), APG's professional hardscapes
product line, achieved another year of sales and profit growth. Lawn and garden
product sales through homecentres also moved ahead, despite the wet weather and
shortened selling season. Decorative stone sales were strong, but profits were
below expectation due to plant restructuring.
In the Precast group, continued softness in the important non-residential market
and depression in the telecommunications sector limited sales growth to only
slightly above 2002 levels. With cost cutting measures and some consolidation of
operations we were able to maintain margins and profits. On a regional basis,
the Mountain States and Southeast improved while the West remained strong. These
improvements offset volume shortfalls in the Northeast region.
Commercial construction markets remained weak in 2003 resulting in a very
competitive environment for the Glass group. Despite sustained difficult trading
conditions throughout the year, sales volumes held firm due to market share
gains while operating margins and profits declined due to competitive
circumstances.
The business environment for the Distribution operations was good in 2003 with a
severe winter resulting in extensive repair work, and RMI demand funded by a
buoyant mortgage refinancing market. Significant profit improvement was
achieved. Heritage branches made meaningful further progress through improved
gross margins. A critical factor in the improved performance has been continued
investment in personnel through extensive training and some external
recruitment. Recently acquired businesses performed ahead of expectations.
In an improving residential construction environment, our Argentine clay
products operations in South America achieved further growth in local currency
terms through effective domestic marketing and a growing export business.
Despite continued weakness in the commercial market, the Group's Argentine glass
fabricator improved its results due to cost reductions and increased exports.
Our Chilean glass operations continued to achieve cost reductions but results
declined compared with 2002 in a very competitive construction environment.
Outlook
In Ireland, the volume of major road works should increase as new projects come
on stream, and the commercial and industrial sectors should benefit later in the
year from economic recovery. However, overall construction activity in Ireland
is forecast to decline somewhat in 2004 as housing demand, which is at an
all-time high, is expected to moderate in the second half of the year. Modest
construction growth is expected in the Benelux and France, while Germany is
likely to remain weak. Strong infrastructure and housing demand in Finland and
Switzerland is expected to offset softness in other sectors. Entry of Poland
into the European Union in May 2004, combined with the availability of lower
real interest rates and affordable mortgage finance, is expected to sustain the
improvement in construction demand evident in the latter half of 2003.
Construction activity in the UK and Spain is expected to grow in 2004. Our
Europe Products & Distribution Division will benefit significantly in 2004 from
the strong level of 2003 development activity and we look to ongoing successful
development of both European Divisions.
The economy in the US is recovering. We expect the residential sector to remain
at, or slightly below, the strong 2003 levels, and the non-residential sector to
improve as the economy picks up in most of our markets. TEA-21, the Federal
funding programme for highways, which was due to expire on 30th September 2003,
has been extended into 2004. The US Congress has approved a 7% increase in 2004
Federal highway spending, while negotiation continues between the Administration
and the Congress on a proposed new six-year highway bill. Despite the challenge
of continuing state budget deficits we expect overall highway markets to remain
broadly similar to 2003. With a strong focus on cost control, continued
development and benefits from recent acquisitions, we look to an improved year
ahead in the Americas.
Our businesses have performed well through a difficult period for the world's
economy, and we are poised to move forward as markets improve. While risks and
uncertainties remain and economic growth in Europe is generally subdued, the
economy in the US is recovering. We continue to focus relentlessly on cost
effectiveness and operational performance and, although reported 2004 profits
are likely to be impacted by the weakness of the US Dollar, 2003 acquisitions
should contribute strongly. Our acquisition programme and overall strategy
continue to deliver and with robust cash flow and comfortable interest cover we
have substantial capacity to capitalise on opportunities as they arise. We face
2004 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 announcement and other factors discussed in
our Annual Report on Form 20-F filed with the SEC.
Group profit and loss account
for the year ended 31st December 2003
Continuing operations
Acquisitions Total Total
2003 2003 2003 2002
euro m euro m euro m euro m % change
Sales, including share of joint ventures 10,247.8 832.0 11,079.8 10,794.1 +2.6%
Less: share of joint ventures (278.5) (27.0) (305.5) (276.9)
Group sales 9,969.3 805.0 10,774.3 10,517.2 +2.4%
Cost of sales (6,909.0) (552.3) (7,461.3) (7,293.5)
Gross profit 3,060.3 252.7 3,313.0 3,223.7
Operating costs excluding goodwill amortisation (2,139.6) (168.9) (2,308.5) (2,209.1)
Group operating profit excluding goodwill amortisation 920.7 83.8 1,004.5 1,014.6
Share of joint ventures' operating profit 34.5 5.0 39.5 33.5
Share of associates' operating profit 0.7 - 0.7 -
Operating profit, including share of joint ventures and 955.9 88.8 1,044.7 1,048.1 -0.3%
associates
Goodwill amortisation (64.9) (10.6) (75.5) (69.6)
Profit on disposal of fixed assets 13.0 - 13.0 15.7
Profit on ordinary activities before interest 904.0 78.2 982.2 994.2
Group interest payable (net) (112.8) (131.4)
Share of joint ventures' and associates' net interest (5.2) (7.1)
Profit on ordinary activities before taxation 864.2 855.7 +1.0%
Taxation on profit on ordinary activities (217.6) (226.8)
Profit on ordinary activities after taxation 646.6 628.9
Profit applicable to equity minority interests (5.9) (5.5)
Preference dividends (0.1) (0.1)
Profit for the year attributable to ordinary shareholders 640.6 623.3 +2.8%
Dividends paid (43.2) (39.1)
Dividends proposed (105.0) (94.2)
Profit retained for the financial year 492.4 490.0
Earnings per share for the year
Basic
- Including goodwill amortisation 121.9c 119.2c +2.3%
- Excluding goodwill amortisation 136.2c 132.5c +2.8%
Diluted
- Including goodwill amortisation 120.6c 118.6c +1.7%
- Excluding goodwill amortisation 134.8c 131.8c +2.3%
Cash earnings per share for the year 223.4c 219.8c +1.6%
Dividend per share 28.1c 25.4c +10.6%
Movements on profit and loss account
2003 2002
euro m euro m
At 1st January 2,520.3 2,544.5
Profit retained for the financial year 492.4 490.0
Currency translation effects on results for the year (23.7) (31.7)
Currency translation effects on foreign currency net investments (498.8) (482.5)
At 31st December 2,490.2 2,520.3
Statement of total recognised gains and losses
for the year ended 31st December 2003
2003 2002
euro m euro m
Profit for the year attributable to ordinary shareholders 640.6 623.3
Currency translation effects on results for the year (23.7) (31.7)
Currency translation effects on foreign currency net investments (498.8) (482.5)
Total recognised gains and losses for the financial year 118.1 109.1
Group balance sheet
as at 31st December 2003
2003 2002
euro m euro m euro m euro m
Fixed assets
Intangible asset - goodwill 1,474.5 1,154.1
Tangible assets 5,145.4 5,004.4
Financial assets:
Joint ventures
- share of gross assets 560.1 366.1
- share of gross liabilities (330.4) (141.8)
- loans to joint ventures 62.3 28.4
Associates 44.6 -
Other investments 12.1 22.1
348.7 274.8
6,968.6 6,433.3
Current assets
Stocks 1,117.6 1,064.0
Debtors 1,681.2 1,525.4
Cash and liquid investments 1,298.0 1,533.2
4,096.8 4,122.6
Creditors (amounts falling due within one year)
Bank loans and overdrafts 510.3 232.8
Trade and other creditors 1,499.7 1,387.2
Corporation tax 77.9 29.6
Dividends proposed 105.0 94.2
2,192.9 1,743.8
Net current assets 1,903.9 2,378.8
Total assets less current liabilities 8,872.5 8,812.1
Creditors (amounts falling due after more than one year)
Loans 3,095.8 3,010.3
Deferred acquisition consideration 96.5 142.5
Corporation tax - 6.6
3,192.3 3,159.4
Capital grants 12.7 14.6
Provisions for liabilities and charges 818.0 779.3
4,849.5 4,858.8
Capital and reserves
Called-up share capital
Equity share capital 179.3 178.2
Non-equity share capital 1.2 1.2
Equity reserves
Share premium account 2,078.3 2,038.3
Other reserves 9.9 9.9
Profit and loss account 2,490.2 2,520.3
Shareholders' funds 4,758.9 4,747.9
Minority shareholders' equity interest 90.6 110.9
4,849.5 4,858.8
Group cash flow statement
for the year ended 31st December 2003
2003 2002
euro m euro m
Net cash inflow from operating activities 1,396.2 1,553.5
Dividends received from joint ventures and associates 19.4 23.5
Returns on investments and servicing of finance
Interest received 36.1 57.7
Interest paid (140.5) (183.2)
Finance lease interest paid (0.7) (0.7)
Preference dividends paid (0.1) (0.1)
(105.2) (126.3)
Taxation
Irish corporation tax paid (19.6) (17.2)
Overseas tax paid (83.3) (145.1)
(102.9) (162.3)
Capital expenditure
Purchase of tangible assets (402.0) (367.4)
Less: Capital grants received 0.1 0.1
Disposal of fixed assets 77.9 104.4
(324.0) (262.9)
Investment in subsidiary, joint venture and associated undertakings
Acquisition of subsidiary undertakings (1,439.0) (793.7)
Deferred acquisition consideration (56.8) (80.3)
Investment in and advances to joint ventures and associates (79.5) (22.0)
(1,575.3) (896.0)
Equity dividends paid (122.8) (111.6)
Cash (outflow)/inflow before use of liquid resources and financing (814.6) 17.9
Cash inflow/(outflow) from management of liquid resources 110.4 (169.7)
Financing
Issue of shares 13.7 13.8
Expenses paid in respect of share issues (0.1) (0.4)
Increase in term debt 688.4 192.5
Capital element of finance leases repaid (3.1) (5.1)
698.9 200.8
(Decrease)/increase in cash and demand debt in the year (5.3) 49.0
Reconciliation of net cash flow to movement in net debt
(Decrease)/increase in cash and demand debt in the year (5.3) 49.0
Increase in term debt including finance leases (685.3) (187.4)
Cash (inflow)/outflow from management of liquid resources (110.4) 169.7
Change in net debt resulting from cash flows (801.0) 31.3
Loans and finance leases, net of liquid resources, acquired with (40.0) (95.8)
subsidiaries
(841.0) (64.5)
Translation adjustment 242.8 248.3
Movement in net debt in the year (598.2) 183.8
Net debt at 1st January (1,709.9) (1,893.7)
Net debt at 31st December (2,308.1) (1,709.9)
Supplementary information
1. Translation of foreign currencies
These financial statements are presented in euro. Results and cash flows of
subsidiary, joint venture and associated undertakings based in non-euro
countries have been translated into euro at average exchange rates for the
year, 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 subsidiary, joint venture and
associated undertakings at average rates, and on restatement of the opening
net assets at closing rates, are dealt with in reserves, net of differences
on related currency borrowings. All other translation differences are
included in arriving at operating profit.
Rates used for translation of results and balance sheets into euro were as
follows:
Average Year-end
euro 1 = 2003 2002 2003 2002
US Dollar 1.1312 0.9456 1.2630 1.0487
Pound Sterling 0.6920 0.6288 0.7048 0.6505
Polish Zloty 4.3996 3.8574 4.7019 4.0210
Swiss Franc 1.5212 1.4670 1.5579 1.4524
Argentine Peso 3.3314 2.9514 3.6955 3.5289
2. Key components of 2003 performance
Turnover Operating Goodwill Profit on Trading Finance Profit
profit amortisation disposals profit costs before tax
euro million
2002 as reported 10,794 1,048 (70) 16 994 (138) 856
Exchange effects (1,150) (112) 7 - (105) 19 (86)
2002 at 2003 exchange rates 9,644 936 (63) 16 889 (119) 770
Incremental impact in 2003 of:
- 2002 acquisitions 489 30 (3) - 27 (10) 17
- 2003 acquisitions 826 89 (10) - 79 (28) 51
- rationalisation - 6 - - 6 - 6
Ongoing operations 121 (16) - (3) (19) 39 20
2003 as reported 11,080 1,045 (76) 13 982 (118) 864
% change as reported +2.6% -0.3% -1.2% +1.0%
% change at constant 2003 rates +14.9% +11.6% +10.5% +12.2%
3. Geographical analysis
Sales 2003 2002
euro m % euro m %
Republic of Ireland 731.6 6.6 713.9 6.6
Britain and Northern Ireland 691.5 6.3 698.4 6.5
Mainland Europe 3,635.3 32.8 3,020.6 28.0
The Americas 6,021.4 54.3 6,361.2 58.9
Total including share of joint ventures 11,079.8 100 10,794.1 100
Less: share of joint ventures (305.5) (276.9)
Total excluding share of joint ventures 10,774.3 10,517.2
Profit before interest 2003
Operating Goodwill Profit on Profit before
profit amortisation disposal interest
% euro m euro m euro m euro m
Republic of Ireland 12.4 129.9 (0.3) 3.4 133.0
Britain and Northern Ireland 5.5 57.4 (5.1) 3.5 55.8
Mainland Europe 28.5 297.8 (34.0) 3.1 266.9
The Americas 53.6 559.6 (36.1) 3.0 526.5
Total including jv's and associates 100 1,044.7 (75.5) 13.0 982.2
Less: share of jv's and associates (40.2) 1.5 (1.1) (39.8)
Total excluding jv's and associates 1,004.5 (74.0) 11.9 942.4
2002
Operating Goodwill Profit on Profit before
profit amortisation disposal interest
% euro m euro m euro m euro m
Republic of Ireland 12.5 131.3 (0.3) 7.8 138.8
Britain and Northern Ireland 5.3 55.8 (5.4) 2.8 53.2
Mainland Europe 22.3 233.5 (28.6) 3.3 208.2
The Americas 59.9 627.5 (35.3) 1.8 594.0
Total including joint ventures 100 1,048.1 (69.6) 15.7 994.2
Less: share of joint ventures (33.5) 2.0 (1.2) (32.7)
Total excluding joint ventures 1,014.6 (67.6) 14.5 961.5
4. Analysis by Division / Class of business
Sales 2003 2002
euro m % euro m %
Europe Materials 1,983.8 17.9 1,927.0 17.9
Europe Products 1,720.6 15.5 1,416.5 13.1
Europe Distribution 1,361.8 12.3 1,089.1 10.1
Americas Materials 2,831.3 25.6 3,072.1 28.5
Americas Products 2,196.3 19.8 2,290.5 21.2
Americas Distribution 986.0 8.9 998.9 9.2
Total including share of joint ventures 11,079.8 100 10,794.1 100
Less: share of joint ventures (305.5) (276.9)
Total excluding share of joint ventures 10,774.3 10,517.2
Profit before interest 2003
Operating Goodwill Profit on Profit before
profit amortisation disposal interest
% euro m euro m euro m euro m
Europe Materials 26.2 273.3 (20.3) 6.3 259.3
Europe Products 13.7 142.6 (16.1) 2.6 129.1
Europe Distribution 6.7 70.1 (3.0) 1.1 68.2
Americas Materials 27.8 290.7 (17.9) 2.8 275.6
Americas Products 20.6 215.6 (14.0) (0.7) 200.9
Americas Distribution 5.0 52.4 (4.2) 0.9 49.1
Total incl. jv's and associates 100 1,044.7 (75.5) 13.0 982.2
Less: share of jv's and associates (40.2) 1.5 (1.1) (39.8)
Total excl. jv's and associates 1,004.5 (74.0) 11.9 942.4
2002
Operating Goodwill Profit on Profit before
profit amortisation disposal interest
% euro m euro m euro m euro m
Europe Materials 25.4 266.7 (19.9) 11.7 258.5
Europe Products 10.3 107.5 (13.2) 2.7 97.0
Europe Distribution 4.4 46.4 (1.2) (0.5) 44.7
Americas Materials 32.0 335.8 (19.8) 3.3 319.3
Americas Products 23.7 248.7 (12.4) (1.5) 234.8
Americas Distribution 4.2 43.0 (3.1) - 39.9
Total including joint ventures 100 1,048.1 (69.6) 15.7 994.2
Less: share of joint ventures (33.5) 2.0 1.2 (32.7)
Total excluding joint ventures 1,014.6 (67.6) 14.5 961.5
5. Earnings per share
The computation of basic and diluted earnings per share is set out below:
2003 2002
euro m euro m
Numerator for basic and fully diluted earnings per share
Profit for the year attributable to ordinary shareholders 640.6 623.3
Goodwill amortisation, including share of joint ventures and associates 75.5 69.6
Attributable profit, excluding goodwill amortisation 716.1 692.9
Depreciation charge 458.2 456.3
Numerator for cash earnings per share 1,174.3 1,149.2
Denominator for basic earnings per share Number of Number of
shares shares
Weighted average number of shares (millions) in issue 525.7 522.8
Effect of dilutive potential ordinary shares (employee share options) 5.4 2.9
Denominator for diluted earnings per share 531.1 525.7
Basic earnings per share euro cent euro cent
- Including goodwill amortisation 121.9 119.2
- Excluding goodwill amortisation 136.2 132.5
Diluted earnings per share
- Including goodwill amortisation 120.6 118.6
- Excluding goodwill amortisation 134.8 131.8
Cash earnings per share (i) 223.4 219.8
(i) Cash earnings per share, a non-GAAP financial measure, is presented here
for information as the Company believes it is a useful financial indicator
of a company's ability to generate cash from operations.
6. Summarised cash flow
The following table summarises the Group's cash flows for 2003 and 2002.
2003 2002
euro m euro m
Inflows
Profit before tax 864 856
Depreciation 458 456
Goodwill amortisation 76 70
1,398 1,382
Outflows
Tax paid 103 162
Dividends 150 135
Capital expenditure 402 367
Working capital movement 58 (90)
Other 30 21
743 595
Operating cash flow 655 787
Acquisitions and investments (1,615) (992)
Disposals 78 104
Share issues (net of expenses) 41 37
Translation adjustment 243 248
(Increase)/decrease in net debt (598) 184
7. Movements in shareholders' funds
2003 2002
euro m euro m
At 1st January 4,747.9 4,735.4
Profit retained for the financial year 492.4 490.0
Currency translation effects (522.5) (514.2)
Issue of ordinary share capital (net of expenses) 41.1 36.7
At 31st December 4,758.9 4,747.9
8. Other
2003 2002
Interest cover, excluding joint ventures and associates
- EBITDA (times) 13.1 11.3
- EBIT (times) 8.4 7.3
EBITDA = earnings before interest, tax, depreciation and goodwill amortisation
EBIT = earnings before interest and tax
Interest cover is calculated by dividing EBITDA and EBIT by Group interest payable (net).
Average shares in issue (millions) 525.7 522.8
Net dividend per share (euro cent) 28.1c 25.4c
Dividend cover (times) 4.3 4.7
Depreciation charge (euro million) 458.2 456.3
Goodwill amortisation charge (euro million)
- subsidiaries 74.0 67.6
- share of joint ventures and associates 1.5 2.0
Net debt (euro million) 2,308.1 1,709.9
Debt ratio 48% 36%
Debt to year-end market capitalisation 27% 28%
9. Abbreviated accounts
The results disclosed herein do not represent full accounts. Full accounts
for the year ended 31st December 2003, 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 2002 containing an
unqualified audit report from the Auditors have been delivered to the
Registrar of Companies.
10. Annual Report post-out and Annual General Meeting (AGM)
The 2003 Annual Report is expected to be posted to shareholders on Wednesday,
31st March 2004 together with details of the Scrip Dividend Offer in respect of
the final 2003 dividend. The 2003 Annual Report will be available to the public
from Thursday, 1st April 2004 at the Company's registered office. The Group's
AGM is scheduled to be held in Jurys Hotel, Ballsbridge, Dublin on Wednesday,
5th May 2004.
Contact : +353 (0) 1 404 1000
Liam O'Mahony, Chief Executive
Myles Lee, Finance Director
Maeve Carton, Group Controller
CRH plc, Belgard Castle, Clondalkin, Dublin 22, Ireland TELEPHONE +353.1.4041000
FAX +353.1.4041007
E-MAIL mail@crh.com WEBSITE www.crh.com Registered Office, 42 Fitzwilliam
Square, Dublin 2, Ireland
This information is provided by RNS
The company news service from the London Stock Exchange I
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