Investment column: CRH builds on robust results

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The Independent Online
CRH, the Irish building materials group, has seen its stock fall sharply this year from a high of just over Irpounds 11 to Irpounds 7.60 - down another Ir5p - yesterday on market woes. This seems harsh on a company that has proved a consistently solid performer with a share price which rose almost four-fold between 1993 and the start of the year.

Yesterday saw CRH deliver another robust set of results with half-year profits up 31 per cent to Irpounds 85m and a cautiously optimistic statement on the outlook.

CRH has proved adept at pulling off a string of "in-filling" deals and it feels the sharp fall in asset values as a result of stock market declines could help it find more suitable targets. Though it will concentrate in its core markets of Europe and North America, it is also starting to consider South America and Asia as opportunities present themselves.

CRH spent Irpounds 144m on acquisitions in the first half, including Irpounds 80m on a collection of businesses in Britain, France, Belgium and the US. It now has an even spread of aggregates, bricks and distribution businesses across Ireland, North America and Europe.

In the US, market conditions are underpinned by the country's $217bn (pounds 130bn) six-year highways spending bill. This, together with acquisitions, helped profits double to Irpounds 29m. There must be concern about the cycle turning, although CRH seems confident that any downturn will be relatively modest.

In Ireland demand is strong, although more competition could be coming as rivals seek planning permission for more aggregate quarries and European subsidies are likely to fall. Perhaps the biggest concern is Britain, where the company admits that higher interest rates are starting to damp down demand.

On full year forecast of Irpounds 339m the shares trade on a forward multiple of 13 - a decent hold in troubled times.