Shares in building materials group CRH yesterday fell by 15 per cent after it said one of its companies in the US has been named in asbestos litigation.
CRH's Allied Building Products business, a distribution firm based in New Jersey, has been named along with a group of unrelated companies in legal actions by former workers who allege personal injury as a result of exposure to asbestos.
The group of companies has already paid out an aggregate compensation amount of $80,300 (€81,275) in disposing of 33 cases. There are a further 244 pending cases involving a total of 251 claimants.
CRH said in a statement that it did "not believe that this litigation will have a material impact on the financial position of the group". However, one Dublin-based analyst said it would be some time before the gravity of the situation became known.
"So far there only seem to have been a relatively small number of cases and it has not cost the company a huge amount of money," he said.
"But when there is even a whiff of asbestos litigation, investors tend to get very nervous. It creates a lot of uncertainty and it may be a long time before we know the extent of this. If it were to stop at the number of claims being taken now, then that wouldn't cause too much trouble but you simply never know with this kind of litigation".
The analyst added CRH was still "a fundamentally very good company" and had handled the litigation well in deciding to "come clean" about the claims.
CRH finance director Mr Harry Sheridan said the company was "not in the slightest bit worried" about the litigation. He said 95 per cent of the claims had come from one law firm and that the rate of claims had slowed significantly since the first batch in 1998.
In 1998, 26 per cent of the total claims to date were lodged. That fell to 22 per cent in 1999, 7 per cent in 2000 before rising to 17 per cent in 2001 and falling again to 10 per cent so far this year.
Mr Sheridan said the claims dated back to the 1960s and 1970s. The drop in the company's share price was something CRH had "no control over", he said, before adding he believed the stock's fall would prove to be short term.
Every case would be challenged by CRH because the company was anxious "not to give shareholders' money away", Mr Sheridan said. He added two of the cases had been settled for just $900 each.
CRH's statement said the company did not believe that the outcome of any pending actions would have a materially adverse impact on its financial position, results of operations or cash flows.
The vast majority of successful asbestos claims came from workers who were in contact with asbestos during the construction process.
