CRH warned yesterday that conditions in its markets were likely to remain difficult for the immediate future. However, the company believes it is well positioned in the majority of its markets to weather the downturn and notes that "while there are risks, there are also opportunities".

A combination of tight cost control and continued expansion through acquisition has served it well to date and are likely to remain the hallmarks of the group's strategy in the year ahead.

Management's continued emphasis on cost control saw it focus on increasing productivity and efficiency last year, while also keeping a wary eye on the cost of bought-in goods and services. It also restructured businesses in need of it, such as those in Poland and the Netherlands, policies set to continue in the months to come.

Meanwhile, its 14 acquisition teams remain on the lookout and it is well placed to fund purchases as its balance sheet remains strong.

The company reported a 37 per cent increase in operating cashflow last year to €787 million. Along with a favourable dollar translation effect on its US debt, which reduced it by €248 million, it was one of the factors behind a €184 million fall in the group's net debt to €1.7 billion.

The broad spread of its business should also protect CRH from marked downturns in any one location.

While European markets such as France, Belgium, the Netherlands and Germany are set to remain weak, the company should benefit from a strong performance in Spain, a steady performance in mature markets like Switzerland and Finland, and signs of a recovery in Poland.

In the US, higher oil prices, which impact on bitumen, remain one of the key challenges facing the group. But CRH is hoping to get most of the increase in energy costs back in higher prices.

Despite a forecast 2 per cent slowdown in US construction this year, the company is targeting higher dollar profits in 2003.