Building materials giant CRH expects 2007 profits to approach €1.9 billion, 19 per cent ahead of the previous year.
In a trading statement yesterday, the group also pledged to buy back up to 5 per cent of its shares, a move that will see it returning cash to shareholders.
The CRH statement said the group "expects 2007 profit before tax to be close to €1.9 billion, a high-teen percentage increase on 2006 and a 15th consecutive year of profit and earnings growth". In 2006, the group earned profits of €1.6 billion.
CRH also revealed details yesterday of acquisitions worth €693 million in the second half of last year. The purchases mean the group spent a record €2.2 billion buying up businesses during the year. This was despite its failure to complete a deal with Mexican rival Cemex for businesses worth €3 billion-plus. The talks fell through when the pair failed to agree a price.
CRH is the second-largest player in its business in the world. Its operations are split roughly 50/50 between America and Europe, with Ireland accounting for around 5 per cent of its activities. Yesterday, the group said it expected Europe to contribute €1.1 billion to operating profits, while its businesses in America, which are focused mainly on the United States, should account for €985 million in operating earnings.
The group also said it was committed to cutting dividend cover to 3.5 times earnings, which will result in larger payouts to shareholders.
It announced yesterday that it it plans to buy back up to 5 per cent of its 547 million issued shares. The group will buy its stock back from shareholders at no more than a 5 per cent premium to its average market price over the five days before the purchase. It will hold the equities as treasury shares. CRH will complete the buyback during its closed period, running from today until it announces full details of its 2007 results on March 3rd.
The group completed 37 acquisitions during the second half of 2007 in addition to the Cementbrouw buyout in August, and the purchase of some Cemex-owned assets later in the year.
The transactions included the purchase of a number of businesses from the Mexican group for €250 million when talks over the larger transaction failed.
Commenting on the year ahead, CRH acknowledged that there were risks but said it is well positioned to "deal with evolving market circumstances while continuing to take advantage of a strong pipeline of development opportunities".
