Building materials giant CRH said yesterday it is hopeful that the impact of high oil prices, which cost it €50 million in 2004, will ease this year.
The company said energy costs, resulting from crude oil prices running at $45 (€35) to $50 a barrel last year, cost it in the region of an extra €50 million last year.
Responding to a shareholder's question at yesterday's annual general meeting (agm), chairman Pat Molloy said the group's ability to cope with high oil prices depended on its ability to pass it on to customers.
"So far this year we are having more success at passing it on through costs, so hopefully the impact in 2005 will be a lot less than 2004, when I believe it was around €50 million," Mr Molloy said.
After the meeting, chief executive Liam O'Mahony echoed Mr Molloy's statement, but warned that a sudden jump in prices during critical periods, such as the end of the spring/summer construction season in the US, could have an impact.
"The trend over a period has been settling on $50-plus a barrel," he said. He added that CRH was passing some of the additional costs on to customers.
Mr O'Mahony also acknowledged CRH has not been buying up other businesses at the same rate as previously. This year to date it has spent around €100 million on new properties, and analysts have been querying whether it will be able to do deals at the same speed as in previous years.
He agreed that deals were taking longer to close than in recent years, but said there was no one explanation for this.
In a statement to the agm, Mr Molloy said that overall trading at the company, which had €1 billion in profits last year on the back of a near €13 billion turnover, had been positive in the first four months of the year.
He said it had made a strong start in its American markets, where despite the fact that the weather-dependent construction season had yet to fully get under way, activity had exceeded expectations. However, he said that the impact of this had been partly offset by the effects of severe March weather in Northern Europe.
"While as always there are uncertainties in economies and markets, overall 2005 has started well and with our sustained focus on cost effectiveness and operational performance, we look to continuing progress as move into the more profitable second half of the year," he said.
