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CRH PLC Posts £536m Impairment Charge


The share price of CRH (LSE: CRH) increased by 3% to 1,741p during early trading this morning after the building materials company revealed strong trading for the beginning of 2014, which so far is ahead of last year, while like-for-like sales in the second half of 2013 increased 2% on the year before.

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Investors have shrugged off the group’s net loss of £243m, down from a profit of £445m in 2012, attributable to a £536m non-cash impairment charge.

The impairment charge in respect to an ongoing portfolio review which aims to “re-set” the group on track for growth. A total of 45 businesses have been identified that will fail to deliver strong future returns and the company has begun an orderly disposal of these operations.

Further impairment isn’t expected as the portfolio review continues. Since 2007 the group has made £2bn in cost savings across the group, while an additional £161m worth of savings was made in 2013.

Pretax loss for the full year was £177m, against pretax profit of £533m in 2012.

The chief executive, Albert Manifold, commented:

“The review of our portfolio announced in November 2013 aims to re-set the Group for growth. While this has resulted in significant non-cash impairment charges, we believe that dynamic allocation and reallocation of resources to optimise the portfolio, together with our traditional tight cost control and capital discipline and our relentless focus on returns, will be key to driving growth and to rebuilding returns and margins over the coming years. We believe that 2013 represents the trough in our profits, and that 2014 will be a year of profit growth. We are encouraged by second- half activity levels in 2013 and by the fact that, while it is still early in the season, trading so far in 2014 has been ahead of last year.”

CCH maintained a dividend per share of 51.5p meaning that investors can earn a potential income of 3% from the company.

Of course, it’s up to you whether that income, today’s results and the wider prospects for the building materials sector combine to make CCH a ‘buy’.

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> Mark does not own shares in CRH.

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