CRH lifts payout despite decline

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CRH, the Irish building materials group, produced a dividend increase of 5 per cent to brighten an otherwise depressed sector.

The payment increase to Ir6.75p came despite an 8 per cent decline in earnings per share to Ir16.05p and a similar fall in pre-tax profits to Ir pounds 57.6m (pounds 59.7m) last year. The company held out little hope of an improvement this year, although it said it was in good shape and would perform resiliently.

Stockbroking analysts said the company had performed remarkably well, given the state of the construction industry. Mark Stockdale, of SG Warburg, said: 'CRH's performance is a ray of light in the sector.' Howard Seymour of BZW said: 'These are really excellent results from what is a very good operation.'

Tony Barry, CRH chief executive, said the company had pruned costs further across the group, but especially in the UK. 'The recession in British construction deepened severely, with volumes at the lowest level for more than a decade and strong price competition.'

The company shed 700 jobs, bringing its British workforce down to 3,000.

Mr Barry said the company's Spanish operations suffered from a 5 per cent decline in construction output, with Catalonia particularly badly hit after the Olympic Games boom. Germany and the Netherlands remained comparatively robust, and the United States showed signs of significant growth.

The shares fell 6p to 237p after rising strongly ahead of the results, which were in line with brokers' expectations.

Analysts forecast flat profits this year, but both BZW and SG Warburg said they were strong buyers of the stock, which stands at a discount of more than 30 per cent to the sector on prospective earnings.