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CRH hit after profit slump sparks fears

SHARES in Irish building materials group CRH dipped yesterday after a warning of a steeper than expected slide in profits.

The Dublin-based company said the outlook for construction markets was still murky, despite cheerier forecasts from its rivals.

CRH, now Ireland’s biggest company by market value, said the fall in profits slowed in the last six months of 2009 but it expected full-year profits to be down by more than half compared to the previous year, to around €750m (£675m) from €1.6bn (£1.3bn).

Although the figure was in line with its previous forecast for pre-tax profits, it fell short of an average forecast from analysts of more than €797m.

Like-for-like sales in the second half of the year were down 18 per cent, a slight improvement on the 21 per cent slide in the first six months of the year.

The company warned in an update: “Trading conditions remain difficult and the timing of any sustained pick-up in developed world construction demand is unclear.”

The stock closed down four per cent in Dublin to €18.77 last night.

CRH said it would carry out more cost-cutting measures than planned, leading to gross yearly savings of €1.65bn against the €1.45bn anticipated in July.

The cost of carrying out the cuts rose to €305m from the original €250m. A more positive note was struck with the news that CRH, the biggest producer of asphalt in the US, is benefiting from US President Barack Obama’s stimulus measures.

Chief executive Myles Lee said the company had also “increased appetite” as evidenced by its spending on 10 acquisitions and investments in the second half of 2009.