Analysts were moved to trim their forecasts for CRH yesterday, after the company said poor weather and unhelpful currency movements would leave first-half profits up to €41 million lower than in 2002. Una McCaffrey reports.

CRH now expects pre-tax profits for the first six months to range between €155 and €160 million. This compares with €196 million in the same period of 2002, with about €10 million of the drop attributable to currency translation effects alone.

CRH said a continuation of the current euro/dollar exchange rate of $1.14 would shave €85 million off pre-tax profits for the whole year. Before currency translation however, the company expects to be more profitable than in 2002.

The statement signalled that business in the second half was likely to be similar to last year, subject to weather patterns.

Analysts said this left open the prospect that it could be difficult for the company to make up the first-half shortfall over coming months.

Shares in the building materials firm were stronger after the statement was issued, as investors decided that it contained little in the way of nasty surprise.

The stock closed up 40 cents at €13.65 after coming under pressure towards the end of that week.

Merrion Stockbrokers analyst, Mr John Mattimoe, said that while the negative trends in the statement had been flagged by CRH over recent months, their impact was greater than had been expected.

He said he expected pre-tax profits for the full year to come in about €30 million below 2002, even when "favourable" acquisition activities were considered.

CRH said yesterday that it had spent more than €550 million on acquisitions in the year to June 30th and looked forward to "a further good level of development spend in the second half of the year".

In the first half, CRH added new businesses in Poland, Finland, Germany, Slovakia, the Benelux states, the US and Canada.

Within existing operations, the company said it expected profits for the first half to be higher year on year in the Republic but lower in the UK when the effect of the strong euro was considered.

In the US and Canada, which typically generate about 60 per cent of the company's returns, CRH predicted "significantly lower" first-half euro profits after currency translation and poor weather had taken their toll.

The company cited severe weather conditions as a factor behind a slight drop in expected profits for mainland Europe.

Goodbody analyst Mr Robert Eason said the statement, while mixed, proved that CRH remained significantly stronger than its sectoral peers.

He retained an "add" recommendation on the stock, despite signalling a reduction in his forecasts for this year.