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CRH like-for-like sales up 5% in first quarter
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Costs and pricing much more difficult in Europe than U.S.
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CEO sees difficulty in passing on European cost increases
(Adds detail, CEO quote)
By Padraic Halpin
DUBLIN, April 26 (Reuters) - Building materials giant
CRH expects robust activity in the United States to
boost first-half sales, earnings and margins, but its shares
fell on Wednesday on a warning that the European market will be
more challenging.
CRH, which makes about 75% of its profits in the U.S., said
double digit percentage sales growth in its two main Americas
divisions pushed overall sales 5% higher on a like-for-like
basis in the seasonally quieter first quarter.
Sales in its Europe materials solutions unit were up a more
modest 6% while Europe building solutions revenue fell 1%, with
the Dublin-based firm citing continued inflationary pressures
and some slowdown in the new-build residential sector.
Chief Executive Albert Manifold said costs and pricing were
a different story on both sides of the Atlantic.
Having managed to increase prices sufficiently by the first quarter of 2023 to cover last year's surge in European costs, Manifold said it would be "much more difficult" to increase prices again this year to cover a more modest forecast 15%-17% increase in European energy costs. "That's going to be more difficult because you have a weaker residential environment in 2023 than we had in 2022. A weaker buying environment makes it more challenging with regard to getting price moving ahead," Manifold told an analyst call. "We don't know the extent of that yet because obviously now interest rates are going to remain higher for longer and that's the main factor with regard to residential demand, it's an affordability issue rather than a supply or demand issue." CRH's London-listed shares were 3.8% lower at 3,870p, one of the top losers on the FTSE 100 index.
In the United States, CRH said it expects continued pricing progress, robust infrastructure demand and good activity in key non-residential segments.
CRH said on Wednesday that it had received strong support from shareholders for plans to move its primary listing to the U.S. at a June 8 EGM. It will delist from Euronext Dublin as part of the move, it confirmed. (Reporting by Padraic Halpin Editing by David Goodman and Sharon Singleton)
Messaging: padraic.halpin.thomsonreuters.com@reuters.net))