CRH confident for 2015 after full year earnings top targets

As it delivered full year earnings above recent guidance, building materials group CRH was confident of making continued growth in 2015 as construction conditions improve, commodity prices wallow and it completes the Lafarge-Holcim acquisition.

For 2014 the Dublin-headquartered company made sales of €18.9bn, up 5% year on year and ahead of expectations, with like-for-like sales up 4%.

CRH capitalised on the recovering markets in the Americas and made overall progress in Europe to deliver a return to profit and margin growth in all six business segments.

Earnings before interest, tax, depreciation and amortisation (EBITDA) surged 11% to €1.64bn, ahead of the group's November guidance and consensus market forecasts.

Reversing 2013's losses, a profit before tax of €761m fed through to earnings per share for the year of 78.9 cents.

The dividend was maintained at 62.5 cents per share, after the company agreed on 1 February to acquire certain businesses and assets of Lafarge and Holcim for a total enterprise value of €6.5bn after the two cement firms agreed to merge.

Chief executive Albert Manifold hailed a year of strong "strategic, operational and financial progress" and said he expected further improvements expected in market conditions across the group's main geographies, together with easing commodity prices, the benefits of cost efficiencies and a favourable exchange translation effect.

In the US, where the pace of GDP growth is expected to pick up in 2015, demand in the residential construction market continues to expand, though at a more moderate rate, while recovery in the non-residential market is "starting to gather pace".

The company said the North American infrastructure market remained "broadly stable" and there looks to be "upside potential" due to the growing economy and increased state spending.

In Europe, the general market environment continues to "normalise" across its main markets.

"The outlook for 2015 is somewhat mixed, particularly in the first half for which the 2014 comparatives reflect the benefit of very benign weather conditions," CRH said.

Western Europe is expected to see some improvement in overall demand, particularly in residential building activity, with Eastern Europe expected to see increased overall demand as a pick-up in the Polish roads programme outweighs the uncertain Ukraine outlook.

CRH has recently suggested that 2015 EBTIDA will see similar organic growth, to €1.79bn.

However, Deutsche Bank said with the benefit of the US dollar strength in recent months it sees upside to this guidance. "However, more important at this stage will be any further detail on the acquisition of the LafargeHolcim assets."

CRH did not provide many more details than were already known, with the proposed acquisition conditional on a CRH shareholder vote at an extraordinary general meeting on 19 March as well as the successful completion of the proposed merger of Lafarge and Holcim and the completion of certain local reorganisations in advance of the acquisition.