CRH PLC (CRH) 2009 Q4 法說會逐字稿

Good morning, everybody.

And you're all very welcome to the presentation of CRH's 2009 results, which is available on webcast and also on conference call.

I'm joined this morning, on my left here, by Glenn Culpepper, our Finance Director; Albert Manifold, Chief Operating Officer; Mark Towe, Head of our US operations; Mairtin Clarke, who's chief of our Europe Products and Distribution businesses; and Henry Morris, who's in charge of our European Materials businesses, obviously encompassing our activities also in Asia.

The entire management team will be happy to take your questions and answers, but first of all we'd like to run through a short presentation.

I'll just present an overview of our results for 2009 and say a few words about our performance by business segment.

And then, Glenn will deal with some financial aspects and provide a little more detail on that.

And then, I'll come back and say a few words about the outlook and our strategy as we enter the main trading season in 2010.

I suppose, first of all, on the operating overview, I think nobody's in any doubt that 2009 saw one of the most severe and pervasive downturns in industry memory.

And also, I think nobody's in any doubt, from our communications during the course of the year in relation to our trading performance, and also in relation to our cost reduction efforts, that CRH has taken strong and prompt management action in responding to these unprecedented declines across our business.

We've implemented significant measures to reduce our costs and to maximize our effectiveness.

And we've been focusing on the elements that contribute most to our performance, and contribute most to improving our competitive positions, and establishing a firm base for recovery.

And I believe that the results announced this morning show a strong achievement in dealing with very significant trade winds across our businesses.

First of all, a look at the outcome and how it relates to our trading guidance that we provided back in the early part of January.

You can see that EBITDA for the year came in at EUR1.8 billion, which is slightly ahead of the guidance when we indicated that we expected EBITDA for the year to be close to EUR1.8 billion.

And that's after about EUR200 million of restructuring costs; again, a figure that's in line with the guidance that we provided in January.

On the profit before tax, we guided to a profit before tax pre-asset impairment of about EUR750 million for the year.

And we've come in at EUR773 million pre asset impairments, which is an increase of about 3% on the guidance.

On operating cash flow; we obviously have been focusing intensely on operating cash flow during the course of the year.

And again, back in January we guided to operating cash flow for the year of about EUR1 billion.

In actual fact, our operations have delivered very strongly on the working capital at the end of the year in limiting the working capital outflow and generating a very strong inflow for the year as a whole.

And in actual fact, our operating cash flow came in close to EUR1.2 billion for the year.

Development spend, in line, obviously, with January guidance; about EUR450 million for the year.

And with the higher than anticipated operating cash flow, our net debt at year-end has come in also ahead of our guidance at EUR3.7 billion.

We guided in January for a figure just below EUR4 billion.

So, very strong in terms of cash and debt position at the year-end.

Our net debt-to-EBITDA at the end of the year is 2.1 times; one of the strongest in the sector.

And I note from some recent peer releases that people are quoting net debt-to-EBITDA levels, excluding any restructuring costs.

The 2.1 times figure there includes the restructuring charges, which obviously impacted our EBITDA in the course of the year.

If we back out those restructuring charges, our net debt-to-EBITDA level at the end of the year was 1.85 times.

So, very strong credit metrics there for the year.

Looking at the figures and how they compare with 2008; results have obviously been impacted by restructuring and impairment charges.

Sales are down 17% in terms of reported sales, but a 20% sales decline on a like-for-like basis, excluding acquisitions, and excluding a foreign exchange translation effect.

Sales, down 21% in the first half of the year, moderating to a decline of 18% in the second half of the year on a like-for-like basis; somewhat lower than that obviously in the final months of the year.

EBITDA, as I mentioned earlier, EUR1.8 billion; a decline of 32% on a reported basis.

And that's after a little over EUR200 million of restructuring costs compared with just over EUR60 million of restructuring costs in 2008.

And if we exclude restructuring costs, the EBITDA decline would reduce to about 26%.

Operating profit for the year; down 48%.

A decline of 66% in the first half, moderating to a 37% decline in the second half of the year as our cost saving efforts began to contribute and come through more significantly.

Profit before tax after impairment of EUR41 million, EUR732 million; down 55% for the year.

And, while our tax charge was lower, we did have slightly higher shares in issue following the Rights Issue back in March of 2009.

And that contributed to a decline at the earnings level of about 58%.

One of the things I'd like to draw your attention to in our income statement, which you have in detail in the release published this morning, is the very low level of retained profits which were attributable to minorities.

And this compares with much higher levels for others in the sector, which range between 15% and 40% attributable to minorities.

And I think from an equity shareholders' point of view, I think this is a very strong indicator of the quality of CRH's EBITDA generation and cash flow generation in the course of 2009.

The release this morning contains the usual detailed analysis of the results across each of our operating segments, and I'd just really like to say a few words about that before handing over to Glenn.

If we look overall at our European divisions, you can see here that EBITDA combined for the three segments of the business in Europe was down 37% for the year in reported terms after restructuring and impairment.

And that compared to our earlier guidance in January for a 40% decline, so came in somewhat ahead of the January guidance.

The Materials and Products businesses were the hardest hit.

The Distribution activities proved more resilient because of their repair, maintenance, and improvement exposure.

EBITDA here fell 42% in the first half of the year, moderating to a 32% decline in EBITDA for Europe overall in the second half of the year.

Again, summarizing here in the box at the bottom of the page, you can see there at the organic line an underlying organic EBITDA decline of EUR400 million on a sales decline of just over EUR1.8 billion.

Downside operating leverage there of about 22%; obviously exacerbated by steep volume declines.

A leverage -- a negative operating leverage there at EBITDA level about 22%.

Had it not been for our cost reduction measures in the course of the year that leverage would have been well over 30%.

Moving on to have a quick look at each of the operating segments within Europe.

We show here our Europe Materials activities, which include the reported results for our 100% owned business in China, and also for our 50% Indian joint venture.

See here, EBITDA for the year down 46%; we guided to a decline of 45%.

Very significant declines in cement markets in Ireland, in Finland, and in the Ukraine, with markets there down somewhere between 35% and 45%.

And with high operational leverage in these capital-intensive cement businesses, obviously quite a negative drag on our results.

Poland had a tough first half, but traded much in line in cement volume terms with '08 in the second half of the year.

And our Swiss infrastructure business remained resilient, with a lot of good projects underway in the Swiss market.

Europe Materials; spent about EUR250 million during the year on development.

And that was primarily expended on the acquisition of a 26% stake in the Jilin Yatai Cement Group in north eastern China.

And I'm happy to say that that business contributed strongly at our associates' line in the 2009 results.

Turning to the Products businesses in Europe, these businesses are predominantly focused on new build construction, as you can see from the bar at the bottom of the page, and have their significant footholds in the main eurozone countries.

And all of these countries suffered to some extent, greater or lesser, from tough economic and business conditions during 2009.

EBITDA worked out down 28% for the year as a whole; we guided to a 30% decline in January.

Steep decline of 37% in the first half, but a better performance in the second half with EBITDA down 14%, again as our cost savings began to come through more significantly and as we saw some pick-up, particularly in our clay brick activities, here in the UK.

We've also advised this morning that we are exiting our insulation activities and also some climate control activities in our Europe Products businesses, which we see really as no longer offering strategic growth platforms for CRH.

So, we'll be proceeding with the disposal of those businesses over the next 12 months or so.

Our Distribution business in Europe; while it has a similar geographic footprint to our Products business, and while it also suffered from weaker new res construction and also from decline in consumer confidence, it does have a much greater exposure to repair, maintenance, and improvement activities, you can see there on the bar chart.

So, it was more resilient than Products, with an EBITDA decline of 21% for the year as a whole, compared to the 28% decline that we experienced in Products.

The retail side of the business; our DIY activities in the Benelux proved more robust than the more trade-oriented builders' merchanting activities during the course of the year.

Turning then to the Americas, which obviously is primarily the United States, with some positions obviously in Canada and in South America; Federal government infrastructure spending, which was boosted by the spending under the American Recovery and Reinvestment Act, which is known as ARRA, provided a counterbalance to continuing declines in residentials and an accelerating rate of decline in non-residential as we move through the year.

As you can see here, reported EBITDA in euro terms down 27%.

Some benefits from a stronger dollar.

In dollar terms, the EBITDA was down 31% for our Americas businesses overall.

Again, very much in line with the guidance of 30% decline that we provided in January.

Again, as you can see, bottom of the graph, an analysis overall for the Americas of the elements of the performance in 2009.

And, again, an organic EBITDA decline there of EUR330 million or so on a sales decline of EUR2.25 billion.

Negative leverage there of 15%, which I think is a good performance given the headwinds, particularly in the res and non-res in the United States during 2009.

Moving into the Americas just in a little more detail; despite the heavy infrastructure stimulus, of which we will see hopefully more in 2010, Americas Materials suffered sharp volume declines because of the declines really in the res and in the non-res segments, and also from some cutbacks on State-funded infrastructure activity.

And this saw aggregate volumes down 23%, although we were able to move prices ahead strongly.

Our asphalt volumes were also down, and our prices in asphalt reflected lower energy input costs.

But we were actually able to expand our margins across all business lines in Materials during the course of 2009.

EBITDA; down 7% in euro terms, down 12% in dollars.

We guided in January to a low teen percentage decline in EBITDA so actually it came in slightly better than that.

We actually managed, despite the steep volume declines, to expand our margins in US Materials in 2009.

We added over 1 percentage point to our EBITDA margin, and our EBIT margin moved ahead by 0.3 of a percentage point.

And when we compare that to the rest of the industry in the United States, we believe this is definitely a superior performance and reflects our focus on the commercial side of our business, and also on generating good cost reductions right across the business in 2009.

Acquisition activity in Americas Materials picked up as the year progressed; some good transactions towards the back-end of the year.

[EUR230 million] spent on acquisitions in Americas Materials in '09, compared to [EUR150 million] in 2008.

And we've a good pipeline of opportunities in this segment of the business as we move forward into 2010.

On the Products side in the US, except for our precast business, which has some infrastructural exposure, you can see from the blue bar chart on the bottom-left of the slide, but this is predominately a res and a non-res-orientated business, and suffered significantly from the trends in those two sectors in 2009.

Our MMI business, which is active in construction accessories, in fencing, and in welded wire reinforcement, was probably the most affected and suffered a significant operating loss due to declining steel prices under very poor demand conditions, and our revenues in this business actually declined 40% in 2009.

And that will compare to average revenue declines of about 25% across the other three segments of this business; our precast, our APG, and our glass activities.

EBITDA, down 53% in euro terms; obviously impacted by the situation in MMI.

Down 56% in US dollar terms; again, in line with the US dollar guidance that we would have given in January.

Our Americas Distribution business, which trades under the brand name of Allied, is totally exposed to residential and non-residential, with a significant repair, maintenance, and improvement segment.

And here, our Exterior Products businesses in roofing and siding were less impacted than our Interior Products.

And they proved more robust than Interior Products because they're primarily focused on repair, maintenance, and improvement.

And while spending there was down, not as much as it was down -- not as much as in new build.

Also, our Exterior Products business in the US had a very broad spread, operating in more than 25 states, while our Interior Products business is heavily concentrated in states such as California, Nevada, and Florida; all of which experienced particularly sharp downturns in the course of 2009.

So, EBITDA for this business, down 66% in euro terms; down 68% in dollar terms; slightly ahead of the 70% decline we would have flagged as our expectations back in January.

So that gives you some flavor of what we faced in each of our business segments in the course of 2009.

If we look at CRH overall, we experienced obviously sharp declines in res and non-res, as I've outlined.

Our infrastructure and our RMI, repair, maintenance, and improvement-exposed businesses did prove more resilient in the course of the year.

So, we believe that the merits of a diverse portfolio were again evident, but obviously very difficult to cope with an underlying sales decline of the order of EUR4 billion without some impact on profits.

However, we have been responding actively over the last three years, as you're very well aware, on the cost side.

And the cost benefits -- gross cost savings coming through these actions during the course of 2009 amounted to roughly EUR850 million.

And with implementation costs of just over EUR200 million, contributed a net benefit of about EUR645 million at the bottom -- to the bottom line in the course of the year.

And without these savings, obviously, the reported numbers that we have today would have been more significantly negative.

So, hopefully that's given you some indication of how we've fared with the different market conditions across our different businesses.

I'd like Glenn now to give you some flavor on the financial side.

And I'll come back and say a few words about outlook when Glenn has finished.

Thank you, Myles.

And good morning, everyone.

Now, just a few slides on our consolidated financials.

Starting with our profit performance, you can see here that our sales -- gross sales in euro terms were down 17% in 2009.

Our EBITDA declined 32%.

And with depreciation and amortization being fixed in the short run, the impact was greater on operating profit, which is down 48%.

We think it's important to look at our financial results on a like-for-like basis, taking out the effects of currency translation, acquisitions, and impairments.

So you can see here that on an organic basis our sales declined about 20%, so it's more dramatic on an organic basis.

EBITDA was down a more moderate 28%, and operating profit down 38%.

We also think it's important to look at the leverage in our business, and by that we look at the change in our EBITDA as a percentage of the change in our organic sales.

So, you can see here that our organic sales were down EUR4.1 billion.

EBITDA declined on an organic basis, EUR734 million.

That's an 18% -- it's 18% of the change in sales.

Historically, that ratio would be in the mid-30s.

And without our cost savings, it would have been around 33% in 2009, so we think that that's an indication of the effectiveness of the cost reduction actions that we took during the year.

Onto an update on our cost savings, just a brief update here; our gross cost savings, as we announced in January, are up to EUR1.65 billion.

The cost to implement in 2009 are up just slightly from our estimate back in January at EUR205 million from EUR200 million.

So, net savings coming through in our business of EUR643 million.

And in 2010, we're targeting an additional EUR305 million of cost savings, with a cost to implement of EUR45 million.

Going on to our cash performance; in spite of the profitability challenges that we had in 2009, we feel we've delivered very well on cash flow.

Although our profit before tax was less than half of the prior year's, we had an improved cash position throughout the year.

You can see here that we delivered very strongly on working capital; that we delivered in all areas.

In particular, our accounts receivable; we improved the rate at which we convert our accounts receivable to cash despite the very difficult credit markets that we faced.

And we made real progress on inventories, where we reduced our inventories more than proportionally to the reduction in sales that we experienced.

Our taxes paid were down because of the lower profitability.

Our dividend; we increased just slightly during the year.

On capital expenditure; we've reduced significant capacity in our business.

And this has enabled us to reduce the amount of maintenance and replacement CapEx that we have to do.

We still continue to invest in our business, to improve the efficiency of our productive assets.

But with a lower maintenance spend, we're able to cut our CapEx almost in half.

So, overall, despite the lower profitability, our operating cash flow at EUR1.16 million is more than double what it was in 2008.

With our strong operating cash flow, and lower acquisition spend, and the proceeds from our Rights Issue, we were able to decrease our net debt position by almost EUR2.4 billion.

And our net debt-to-EBITDA, at just over 2 times, 2.1 times, is certainly one of the lowest in the industry.

Our EBITDA-to-net interest coverage, at 6.1 times, is lower for 2009, but it's still well above our covenants.

Looking at our debt position, our gross net -- gross debt at the end of 2009 was EUR5.1 billion.

Most of that is outstanding bond debt.

We've paid down most of our bank facilities, so the total of EUR5.1 billion.

If you look at our maturity profile, there's no bubbles in our maturity profile.

As you can see here, we're very well balanced.

Over the next five years our debt maturities are only EUR3.1 billion.

And at the end of 2009 we had EUR1.4 billion of cash and EUR1.6 billion of unutilized committed facilities.

So we're in very good position there for the next several years to address our debt maturities, and still have plenty of cash to address acquisition opportunities.

With that, that concludes the financial review, and I'll turn it back over to Myles for his concluding remarks.

Thanks, Glenn.

Just to quickly wrap-up, and first of all take a look at the external environment; and as we flagged in our statement today, we expect a difficult demand backdrop through much of 2010, particularly -- difficulty obviously in non-residential markets.

And the prolonged severe weather in January and February has not been a helpful start to the year.

In Europe; obviously, a lot of focus at the moment on some of the fiscal deficit concerns.

Hopefully, we'll see those resolved as we move forward.

And while a lot of countries are impacted by that at the moment, particularly some peripheral countries, I think we're seeing very good resilience in Poland, which has come through the recent economic difficulties in good shape.

And we see a good strong demand outlook, particularly on infrastructure, in our Polish operation for 2010.

On the US side of things; obviously some recent patchy statistics on the residential side.

But we are now four years into the decline in the residential markets in the US so, hopefully, as we move through this year we'll see some better and more consistently positive numbers coming out there.

On infrastructure, which was a major support for the business in 2009, and which we expect will be again in 2010; there is some ongoing political debate at the moment with regard to the extension of the expiry in SAFETEA-LU program in the United States.

And we would hope to see that resolved over the next week-to-10 days and provide a firm footing for Federal funding for highways and road construction during 2010.

Also, we suffered last year, obviously, some negative translation effects, primarily arising out of weakness in Eastern European currencies.

As we stand with things at the moment, we do have the potential for some translation benefits with the stronger dollar versus the euro, and also with a strengthening of some of the Eastern European currencies, particularly in the Polish zloty, compared with last year.

Looking to the internal side of the business, and the things which are within our control; as you've seen, we've made significant adjustments to our cost base over the last three years.

And we continue to have an ongoing focus on the fundamentals; scaling our operations to meet demand levels in the market; delivering further commercial and cost benefits across the business; maximizing our cash generation to build on our existing balance sheet flexibility; and generating value-enhancing opportunities.

And our aim is to strengthen our operations; to further build our businesses to ensure that CRH is well positioned to take advantage of upside demand development as we move through this year and into next year; and also, to avail of value-enhancing acquisition opportunities, which we continue to review and look at with our usual rigorous approach.

So, with those few comments, I think we're ready to move to questions and answers.

I think we'll initially take some questions and answers from the floor here.

And then, after that, we'll move to questions and answers from people on webcast and on conference call.

(Operator Instructions).

Ian Osburn from ING.

Thanks for that.

Just a bit more on pricing.

You mentioned Materials pricing in the US was positive.

I wondered what it was like at the end of last year, and what it -- momentum's been like into this year.

And also, if you can give us some information on pricing in Europe.

And also, a second question is, in the absence of further cost cutting, presumably your margins are now pretty sensitive to the movement in prices generally.

And my third question was just very quickly on development spending environment; if you're seeing plenty of opportunities out there.

And if so, what it is that's reducing your development spend; whether it's pricing or just the lack of suitable opportunities.

Thanks.

Thanks, Ian.

A number of questions there.

I suppose if I just -- just on the cost side, we do have further cost savings coming through in 2010, as was outlined in Glenn's slide there.

So, the cost reduction efforts continue.

And we'll be monitoring demand conditions as we move through the year, and we do not rule out some further cost and additional reduction measures as we move through the year, depending on the market environment.

On the pricing side, we had strong pricing last year on the Americas Material side of the business.

I think our average price increases certainly were higher than others in the industry.

And price, average price increases; it would have been pretty similar through the year, first half/second half.

A lot of pricing is set earlier in the year.

We do believe though that we will be seeing somewhat lower levels of price increase on aggregate for 2010.

Where last year was mid-single digit, 6%, we're probably looking at low-single digit price increases on the aggregate side in the US for 2010.

The actual pricing will be dictated very much by the input costs that we face as we move through the seasons.

On the European side of things, we had some end-price increases overall in 2009.

We have faced some challenges in some of the more severely affected markets in downstream products.

So, I think pricing, generally on the heavy end, will be pretty flat looking forward into 2010.

On the acquisition side, we spent EUR450 million last year.

We did step back from acquisition activity in the middle of 2008 when we saw how markets were developing, if you like.

And then, with the financial crisis in the autumn of '08, we put a lot of opportunities, which we had been working on, on hold.

We've re-engaged with many of those in the course of the last 12 months or so.

And I think that would have contributed to the step-up you saw, particularly at the end of the year in terms of deal flow in our Americas Materials operation.

So we'll be, I suppose, more ambitious on the acquisition front for 2010, but still being cautious because of the trading environment.

And I suppose the difficult start to the year, particularly in terms of weather conditions, which have made it a bit more difficult to discern precisely what are the weather effects and what are the underlying trading effects, we'll have better visibility on that as we move into the more important trading months now with March, April, and May.

Excellent, thank you very much.

Tobias Woerner from MF Global.

Two questions, if I may.

Just to follow-on on the cost savings question; the EUR1.65 billion was announced at the beginning of the year in the trading statement already, if I'm not mistaken.

So you didn't see it necessary to increase your cost savings target for 2010 versus the one which was included, I suspect, in the beginning of the year; is that correct?

That's correct.

I think we will be, obviously, monitoring what's necessary as we move through the year.

And it's quite likely at some stage later in the year we will be updating again in relation to cost savings.

But additional measures have been put in place since then, but I think, Albert, you might like to comment on that.

It's two months ago, Tobias.

And we have our target for this current year.

It's been well-flagged; we're working on those programs.

As Myles says, we're continuing to monitor the situation.

We have additional programs in place.

And it's our intention to update you later on in the year, probably at the interim stages.

But we have a program in place; we're going to deliver on that, but that doesn't mean we stop looking at other programs that are there as well.

Thank you.

The second question; I have a figure in the back of my mind, but just maybe, Glenn, in terms of the sensitivity of $1 to EUR1, and the PLN1 to EUR1, for you as a Group.

Glenn, would you like to --?

Yes, the -- every 1p change in $1 to EUR1 would add about EUR3 million to our profits.

That is, obviously, somewhat less than it would have been when profits were higher.

Thank you.

Good morning.

Nicolas Godet from Exane BNP Paribas.

A follow-up on the cost cutting issue.

You mentioned a EUR260 million incremental net impact, but you would agree that on top of this you had EUR200 million of charges last year that will vanish, so it's an incremental EUR460 million net?

Yes.

Okay, thank you.

That's, obviously, subject to any further changes, additions to our cost savings programs, which also could involve some further implementation costs obviously, which, as Albert said, we'll update you on as we move through the year.

Before moving on, a question on the outlook and strategy.

You mention in your release an 18.3% tax rate; is that something we should expect again in 2010 and 1011?

Glenn?

Our tax rate is down in 2009 because of the mix of our profits.

The biggest factor in that is the United States.

I wouldn't expect 18% -- I would expect something a little bit higher, perhaps between the 22% that we had in 2008 and the 18% that we had in 2009, going forward.

Thank you.

And then, two other questions.

You've mentioned a strategic review.

You've mentioned the exit of climate solutions and insulation.

Is your review complete?

And does it mean that you will keep the other businesses and will continue to invest in them?

I think in the release you've mentioned that you could invest more into sanitary distribution in Germany.

Could you comment a bit on this strategic review?

I think we've -- obviously, as part of our ongoing review of our business, we do question elements of the portfolio.

And we have been looking at the components of the portfolio over the last couple of years, and that has led to the decision that we've announced this morning with regard to the insulation activities in Europe, and also some of the climate control activities.

On our other businesses, we see those as core.

Distribution obviously is an area where we've had good success and which has proved resilient in the course of 2009, and obviously is an area where we'd want to continue to look for good development opportunities.

I don't, Mairtin, if you'd like to add to that given that --?

Yes, I think the program of looking at the portfolio has been going on for a while.

Over the last two years we've done some minor trimming, particularly in Products and Distribution in Europe, when we took a major look at the Building Products businesses, which as you know covers a broad range of businesses, and looked at it with the intention to recognize businesses that could grow beyond EUR1 billion per annum over a shorter period of time.

And really, with respect to the two businesses, being the climate control and the insulation, we felt that we wouldn't be able to reach those within that period of time.

They're very good businesses.

They're profitable.

But we just felt they'd perhaps be better under the guidance of another group.

And my last question, with regards to your outlook, you've mentioned some uncertainties regarding the US residential market; what do you think about Europe?

I think [Sincoba] mentioned yesterday that H1 would be a bit weak but H2 could be a bit better.

What is your view on residential markets in Europe?

Well, I suppose, on the US residential markets for starters, we saw some positive statistics in the later months of last year, and then some of the more recent statistics have been more negative.

Now, they're clouded I think obviously by seasonal effects generally.

A lot of these statistics can be patchy at the back-end of the year and the earlier part of the year.

I think some of the anticipated expiry of tax incentives in the US may also have impacted on things there.

So, it's just a little uncertain again at the moment.

But we're four years into a downturn in US residential construction so I think the sense would be we're getting near bottom.

On the European market, it's quite a wide range obviously of residential markets.

Countries like Ireland and Spain obviously are not going to see recovery in residential construction for a number of years.

On the other hand, we have seen some pick-up in the UK in the latter months of 2009 and as we move through into 2010.

And we would feel, I think, Henry, the housing market in Poland is showing some evidence of pick-up as well; if you'd maybe like to comment on that?

Just in the last couple of months there will be some activity, which I think will grow as 2010 goes along.

And also, in Finland I think, following government stimulus in public housing, then there's been a small pick-up (background noise) will happen in 2010.

And I think the Swiss housing market continues --.

Remains strong, yes.

And the Dutch housing market; is margin is probably going to be somewhat more difficult this year?

Yes, I think we're expecting another decline in 2010 in completions.

It's not expected really according to the various bureaus to recover up until around 2012.

And I think the housing activity that we serve in Germany is probably more focused on repair, maintenance, and improvement rather than new build.

And that actually proved quite robust in '09.

In '09, yes.

And again, in Germany, the overall size of RMI in the housing is greater than the size of the new housing; probably the only country in Europe where that's the case.

So, we're less exposed to new housing in Germany than RMI.

Thank you.

Hi.

It's Ben Morris from RBS, on the credit side.

I'll limit myself to two questions.

In terms of the working capital, you obviously had a EUR700 million inflow this year.

If we ignore underlying -- or ignore changes in sales, to what extent do you think you can eke out further working capital savings this year?

My second question, in relation to the debt maturity profile, you've obviously got a fairly balanced profile over the next few years.

In terms of your shorter dated maturities, would you be looking at using your EUR1.3 billion cash balance to take those out?

Or would you like to keep cash relatively high for potential acquisitions, and then look at maybe doing additional bonds to term-out those facilities?

Thank you.

Okay, sorry, the first question was on?

Working capital.

Working capital, yes.

Okay, we think we have further potential to improve on working capital whatever the level of sales may be.

Certainly, some of the decrease that we had was because we had lower levels of sales.

However, if you look at our receivables, and our inventories on our balance sheet, we were able to reduce those by a larger percentage than the percentage of sales reduction that we had.

And particularly, with inventories, it's been very difficult.

It's difficult to cut your inventories when you're also facing lower levels of turnover.

And we've started to turn the corner on that, we believe, and we'll have further good results, particularly on inventories in 2010 we believe.

On the debt maturities, we have very light debt maturities in 2010; EUR400 million.

We would be able to satisfy those out of the cash generated from the business, we believe.

However, we are -- we do have a high level of cash right now.

It's going to depend on the level of acquisition activity that we're able to complete whether or not we'll need to go to the financial markets for more credit.

Right now; we wouldn't need it, absent a much higher level of acquisition spend.

As to what we do have; there are quite a number of dollar bonds in issue in the US market.

We did our debut euro bond issue last year.

It would nice to add a little more debt to our bond offering in Europe with a range of maturities.

So, hopefully, in the course of the year, with acquisitions, we'll have the opportunity, if the market is right and if the appetite is there, to do something on that front.

Thank you.

Mark Stockdale at UBS.

I've got two, if I may, please.

Obviously, in the US Materials, you gave us all the data, thank you, about the fuel and energy changes; I wonder if you can give us some scope of your view of the delta this year.

Is it going to be neutral, or is it going to be negative?

What can you do on the energy side?

And how much have you hedged?

And then, secondly, a different topic.

Just on pricing in the Euro/US Products, I'd just be interested if you'd give us a little bit more color into some of the more Product categories as where you have seen price pressure, if at all, and where there might be gross margin pressure appearing this year as non-res obviously continues down.

Well, maybe I might ask Mark Towe, who has responsibility for all of our US operations, maybe to address the US Materials question there.

Yes, Mark, clearly, the energy costs are going to be a little higher this year.

We see that; I think we've planned for that.

And so the biggest issue that we would have is on the asphalt liquid volatility there.

The prices are higher now than they were last year.

But as you well know, we have a [wonderful] program there, and we are in good shape there.

I think the issues that we have really is whether we can pass these costs on, and we think we can.

But we have not -- we hedged a little bit on the diesel, and so forth.

But, overall, the costs are going to be higher but I think we will be able to pass that on.

I wonder, just a supplementary, Glenn, to that, whether you can give me, at the Group level, what fuel and energy [volume] was as a percentage of sales '09 versus '08?

I don't have that figure at my fingertips.

It'd be between 9% and 11%.

It was 11% in '08.

But we did better on energy costs in 2009, so it would have been below that.

On the Products pricing, maybe, Mairtin, you might say what the experience has been on the European side of things.

Mark, we have three businesses in Products; concrete, clay and building products.

Concrete varies.

We have structural businesses, and there pricing is difficult, and that's right across Europe, and we don't expect that to stabilize in 2010.

The rest of the businesses are more stable on concrete; that's landscaping and what we call civil networks.

In clay; most of our markets will be at least stable this year, or slightly positive in terms of pricing.

Some other ones, but not the major part of the business, could come under some slight pressure.

And in the building products businesses; again, I would expect them to be more or less stable, so not severe pressure.

So, the only exception is the structural concrete business.

On the European or on the US Product side; obviously, those markets had very severe pricing conditions, particularly in MMI, during the course of the year because of the decline in steel prices.

In the concrete and glass product side of things, you might comment, Mark, on the pricing there?

Yes, on the (inaudible), the issue with MMI clearly was with the steel and [important] issues that Myles talked about.

The other issues on the pricing; you take a look at what we're looking at today, APG, our home center business for example, very competitive there.

The issue we're trying to do; we're probably going to have quite flat pricing in 2010.

And really, what we're trying to focus on is maintaining our margins.

And, clearly, what we've talked about on the cost reduction, that's fairly in-play, and what we're trying to do there.

But the pressure that we have coming in on our other pricing for our raw materials, maybe take a look at that, overall, we think they're pretty flat across the Group.

So the pressure to have to raise price is not [as pushed] as it normally would have.

So, overall, I think our prices are going to hold for 2010, and maybe upside in some of the product lines.

Thank you.

I think just, Mark, on the energy side, I think we -- in 2008, I think the overall numbers were somewhere around 10% to 11% of sales between energy and energy-related input costs.

I think, just some quick numbers here, but probably back to about 9% overall for 2009; we haven't fully bottomed that out yet.

Aynsley Lammin from Citigroup.

Could you just comment on -- or update us on what you expect the infrastructure spending to do in the US for '10, please?

If you could split that a bit between how you're seeing things at the State level, and the fiscal stimulus money.

And then, secondly, similarly for the US non-res commercial side; how much you expect that to be down this year.

And just lastly, some guidance on depreciation for '10, please.

I suppose, on the infrastructure side in the US, I suppose one of the advantages for the current year would be the funding that's provided under the American Reconstruction and Reinvestment Act, the ARRA Act, which you remember was $28 billion that was provided in the earlier part of last year.

I think the estimates are that somewhere around $6 billion of that was spent in 2009, and the estimates are that we will see $11 billion to $12 billion of spending on that in 2010.

Now, a lot of the spending last year was on quick shovel-ready projects.

There probably will be a bit of new-build coming in, in 2010.

But it's still a significant jump-up.

On the Federal side, Mark, maybe you might just comment on the ongoing Federal program, SAFETEA-LU; you might just comment on that.

Yes, we felt that the new jobs bill went through the Senate last week, and we felt that was going to get done on Friday last week through the house.

They ran into a snag on Friday.

And as a matter of fact, and you've probably seen some of that, they shut down some of the funding, and they had to furlough some people on Monday.

We're still very confident that this is going to get done.

It's a political thing.

We think it's going to get on the house for probably this afternoon, so we think this is going to get resolved here pretty quickly.

As far as the funding, as Myles mentioned, we do have a carry-over in 2010.

A lot of the projects now -- what we did last year, were the projects that were ready to go, they had engineered, ready to go, which helped our asphalt business.

So this year, a lot of the projects are going to be major projects and bridge repair, which we're involved in that as well, but [not] the impact there.

I think the funding, we would feel pretty confident about 2010 that the infrastructure's going to get spent.

And, hopefully, we'll get this extension done here in the next week.

On the non-residential side, I suppose we look to the PCA, I guess, for some guidance for what it may be worth in terms of non-residential.

And I guess their numbers, which came out in the fall, were for a decline in private non-res of about 19% in '09 and about 22% in 2010.

Our own sense, I guess, on non-res would be that the declines we've experienced in non-res in '09 have been steeper than that, so maybe they have got the timing a little bit wrong.

But it will be a tough year for non-residential construction in the US; again, funding issues coming into play there.

In think on the depreciation, Glenn, and amortization question?

Yes, we probably are right around EUR800 million in total, of which the amortization would be about EUR40 million.

Mike Betts of Jefferies.

I have two questions; one, maybe just a follow-up on Aynsley's to Mark.

When you're talking about the jobs bill, is this on top of an extension of the SAFETEA-LU, because I know it expired at the end of February and that's got to be extended?

Are we talking about another jobs bill on top?

And then the second question is, the assets you were talking about disposing of, what's the book value of those assets, if you could give us an indication?

And the impairment charge, and apologies if I missed this, that was in the 2009 numbers; was that on those businesses?

No, it wasn't on those businesses.

And I don't think we'd be prepared to give you a net book value for that because that might be information which, obviously, would be helpful to some of the potential acquirers of those businesses.

Could you give us the sales then?

I think we can say that the sales are probably, combined, are somewhere, Mairtin, what between EUR300 million and EUR400 million?

Yes, I believe they are slightly less than 20% of our Europe Products and Distribution sales; you know, between 5% and 10%.

And the asset impairments were EUR41 million.

And what were they on?

Well, they were various businesses throughout the Group.

About EUR30 million of it were PP&E, and about EUR11 million of goodwill that we wrote off.

On your answer on the other one, the jobs bill doesn't add any infrastructure spending.

What it does for us is that it protects 2010, or extending the program through the end of December, and it also addresses the highway trust funding through the end of the year.

So, really, there is a lot of talk about the comeback after this gets done, and after the debate over the healthcare thing.

The next piece is they may take a look at extending that and other jobs.

They reduced it back to try and get it passed through right now.

And if you remember, they were talking about $85 billion; it's now down to $15 billion, and they're trying to get that done.

I think there will be another -- there's a lot of talk about adding later on, but we haven't talked through that yet.

Okay.

And if this comes through, the extension to the end of December, the rescission money will be back in will it?

Because I think that the extension so far it doesn't have the rescission money in, does it?

The new bill will have that in, is that correct?

Well, it will just extend what was there.

And the program itself, SAFETEA-LU, expired last October, 2009, and they've been extending this as we've gone.

So, it's not new funding; it's just following off what we had.

Thank you.

Good morning.

It's Laurie from Goldman.

Three questions, please.

Just wondering, for the restructuring, and ideally the impairment, would you be able to break it out between the different divisions, just so we can get a clean EBITDA number?

The second one was just if you could give us any guidance on the 2010 CapEx, because obviously that's come down quite a lot in 2009.

And then the third question was just in terms of how you're seeing the US order book.

I appreciate you've obviously got some fiscal stimulus coming in, but then some State-level reductions.

So just an idea, on an absolute basis, what the indications are from the State-level guys at the moment of how that's looking.

Thank you.

Okay, on the capital expenditure side, I think we see it as pretty similar to the level of spending in 2009.

Glenn, I think that's fair to say?

Yes.

In the order of EUR0.5 billion.

I think in relation to the restructuring, I think in the statement today we do show the differential movement in restructuring charges in each of the segments between 2009 and 2008.

I suppose, very broadly, of the restructuring, probably around EUR70 million of the 2009 charges in Europe Materials, there's about another EUR55 million split between Europe Products and Europe Distribution; and then the balance of the EUR205 million for restructuring would arise in the US, largely in the Products area.

On the order book, Mark?

I think obviously it's early in the season.

The bidding season hasn't started.

Yes, it's really hard to say at this point what the impact -- what the stakes -- the matching pieces.

At this point, our look at it this year is that they're going to come up with the money on the projects that they want to do.

Clearly, the lettings for the projects, or whatever, just really get started in March and April to see where we are, so it would just be a guess for me to what we're saying at this point.

I think the funding, if we get through the Federal piece in the next week or so, I think the confidences that they're going to have out there is going to be positive for us.

And if you go back to the program from last year, they don't have to match the funding there.

That's all the funds are coming from the Federal government.

John Fraser-Andrews, HSBC.

A couple of questions.

Following on the last question in US Materials, can you indicate what level of cannibalization you felt you saw in 2009 from the Recovery Act on State spending falling?

And I appreciate it's early days in the year, but what's been the impact of the weather in levels of activity?

Where do they stand compared to last year?

Or has the follow-on of Recovery Act work nudged them higher?

That's the first questions.

Well, I suppose the reality is that for our Americas Materials business there is very little activity in the early months of the year in any event, because a lot of those businesses would be in the northern tier States, which would be effectively shut down.

But for the sort of businesses that we have expanded in recent years in the southern states, particularly through the APAC acquisition, which was back in August of 2006, certainly, the widespread cold snap in the US has dented activity levels, Mark, in some of those southern states in Florida and Arkansas, Missouri, in the early months of the year?

Yes.

It's been very slow because we have a lot of projects booked to do, and we haven't been able to do that.

And it was very cold in Florida, for example, in January and February.

But the good thing about that early in the year is that we'll have time to pick those projects back up.

Like in the northeast, if the season doesn't start until May and it normally shuts down probably November 1, when you miss those days now you can't make up for them.

But I think the stuff in the south, we'll be able to catch-up so I don't think it's going to have an impact for us overall.

Here, again, it's very hard for me to guess what the impact on the State funding really was last year.

But I don't [think that] the States did take the opportunity of having additional stimulus funds from the government to -- particularly in States which had budgetary pressures, to actually cutback on the funding they put forward themselves.

I think there is an upside to just what we're talking about; whether in the US, and particularly the very severe prolonged cold snap, it does create a lot more repair and maintenance needs when the season does begin to start.

And that's particularly true in the northern tier States.

So I think there is some potential there, which will be created for us by the very harsh winter conditions that we've seen there.

So is your sense that the State spending was circa 5% or 10% down?

And my last question is, in Ireland --

I don't think we see it as being down that much in the US in '09.

Thank you.

And in Ireland, can you just indicate how much of your costs you've taken out of that business in the last couple of years in response to the downturn?

Well, I think overall, Albert, maybe you might comment on the cost reduction.

Well, I think if I just take it across two sectors; if I look at manning levels, we've reduced our manning levels over a two-year period by over 25%.

That would be across the board.

And some of the areas which suffered some of the biggest losses, for instance, Ireland, would have seen higher falls than that.

I think we would have [resettled] our capacity to the new demand situation essentially there.

And when you look at what's the demand falls in Ireland, as Myles has already mentioned, we've seen cement volumes down quite significantly, [less than] 40% of Ireland.

We've had to scale back our operations and our capacity to be in line with the market, going forward.

There will be quite significant reductions in Ireland due to scale in line with future forecasts, so headcount and capacity, we'll see significantly cut backs in [Ireland here].

I think I mentioned that of the restructuring costs last year, EUR70 million or so arose in Europe Materials.

A very significant proportion of that EUR70 million actually related to the restructuring of the Irish operation.

Can you comment on Irish cement pricing?

And are you optimistic for a positive EBIT performance from Ireland in '10?

Well, I think given the scale of the restructuring that we've taken, obviously, we wouldn't see that as being necessary again next year, so that would be a positive.

I think a lot will depend on how volumes pan out for the course of 2010 in Ireland.

Henry, you might like to comment on pricing trends there?

Yes, we had a small increase in prices last year, I suppose following on, on higher energy prices coming in to last year.

We have a better energy picture going forward this year.

We've secured most of our energy for the year.

We would, between savings and cost reductions, see approximately a 5% reduction in energy costs.

There's some pressure to pass that on, and we might see prices slip a little bit, but not to that extent.

Thank you.

John Messenger, RBS.

First one, actually, just sticking with Ireland and cement; in terms of obviously aligning the staffing and everything else, but you've clearly got a big gap in terms of capacity utilization there, would there be any sense in -- are there any plans that you might start taking cement from Ireland elsewhere?

Or is it something that's a useful thing to have in your back pocket when it comes to negotiating in Europe on the price you're going to pay for cement?

Just in terms of physically would it make sense, given that -- if Ireland's going to take a long time to come back, given that you've got pretty new capacity there in terms of what you spent on it, does it make sense for that potentially to be moved around at some point if Ireland stays weak for the next three to four years?

That's the first one if I could.

I think that's quite a strategic question, John.

It's too commercially [sensitive]?

And commercially sensitive, and I don't think we'd want to really delve into that too much.

Just, second one was, in terms of last year, the '08 acquisitions, when we look at the numbers that have come out, total benefit from '08 was EUR74 million on trading profit.

If I strip the associates and JVs out of the spend, it was about EUR886 million, so you made about an 8.5% return on capital.

Clearly, those businesses are at the bottom of their profit cycle or heading towards it.

Did those returns stack up in terms of where you expected them to be, in terms of how much profit recovery there will be down the line?

Or -- and on the back of that, what kind of hurdle rates -- or how are you testing acquisitions in terms of paybacks and other dynamics this time round, in terms of what you're prepared to buy in the next 18 months?

Well, I suppose, as you say, the return on those in a very tough year was about 8.5%, which I think was good in the circumstances.

Our expectation, obviously, would have been to have been closer to 10%.

Certainly, that would have been the expectation of the beginning of '09.

I think in terms of our approach, and our evaluation methodologies for acquisitions, they haven't changed.

Obviously, what changes as we move along will be our estimate of our own cost-to-capital, which we obviously have to revise.

But, fundamentally, the approach to valuations hasn't changed.

Albert, would you like to comment on that?

No.

I think really what we have to look forward, John, is that the outlook is so uncertain, and we factor in enough -- a number of scenarios to go forward, we're much more sensitive to what the downside situation might be and evaluate that as well.

Whereas, before it was a much more stable environment going forward, one could predict with greater certainty.

I think that's the issue.

We've adjusted our cost-to-capital, but there's an increased risk in the assumptions that you're making that, given that environment, we're just much more careful in the deals that we're doing.

Just one of the things about the Group, because, Myles, you mentioned the PCA and their non-residential number, clearly, we could get some quite -- you can get some pretty miserable numbers for '10 if you start to take the PCA's non-res, with views obviously around infrastructure and housing.

But when it comes to Mark, and I guess to Mairtin and Henry, in terms of when they look at markets where they're both in those areas, is there anything that's telling you that non-residential, the rate of decline -- in terms of the shape of what you expect is going to happen in '10, are there lead indicators that Henry's seeing, or that Mark's seeing, in the Materials end that actually is telling you something about where Products will be in the next six to nine months?

Just in terms of the shape of it.

Because the back-end of the build cycle for a lot of products would make me think that Materials should have seen the worst of it, and that maybe it's not quite so bad from here, whereas Products has maybe got a bit of downward pressure from the non-res still to feed through.

If your point, [Mairtin's] about timing, I guess, what happens if the PCA get it wrong?

Or what does it mean to CRH in terms of just the feel that you've got?

Well, John, just maybe to respond just generally to that.

I suppose the different -- if you, say, look at our US business and different elements of our Product portfolio in the US, tap into different points in the construction cycle, for instance, our glass business is late cycle in construction because it's one of the products that goes in towards the end of the construction process, so it would have performed pretty well, Mark, I think right up to middle of the year and then began to see a dramatic falloff in the back-end of the year, and that will continue.

Whereas some of our other heavier Product areas, like precast, obviously would have seen the brunt of the non-res decline at an earlier stage, and I suppose it's somewhere closer to stability than the glass business would be.

So, different elements of the portfolio tap into different points in the non-res cycle.

And, again, I suppose that's part of the balance that we have in those particular businesses.

And, Henry, on the non-res side?

There is -- I suppose it is very difficult to see forward.

I would say, if we're hopeful, there to lead the infrastructure in Poland will knock-on to a fairly significant non-res, if you like, follow-on, but that hasn't started yet.

But I think we would certainly expect that that would be quite strong over the next few years.

But I think where we are seeing signs of pick-up in the residential side, there's not that much sign of pick-up on the non-res side anywhere.

Thanks, okay.

I think just for some -- there are people who are not present in the room here, we're having some technical problems with our webcast queries.

I think we'll -- if anybody on the webcast would like to call the dial-in number we can deal with their queries on receipt of those.

Alternatively, we will reply to those queries by email after this meeting concludes.

So, I guess, anybody on the webcast, if you use the dial-in number to feed through any questions then we'll respond.

Hi.

Mike Bridges, SocGen.

Firstly, on the working capital, how much of the saving do you think is structural?

Glenn?

Well, it's hard to separate that out.

But if you look at our inventories, which we talked about earlier, our inventories are down over 20% year-to-year.

Our sales were down 17%.

So we've certainly decreased our inventories more than our sales have come down.

And in most businesses, there's a certain base stock level which we're just not going to go below, especially in the short run, so I can't give you precise percentages on that.

But we're confident that we're bringing our working capital down in concert with the lower volumes that we've seen, and that we're stepping beyond that and making real structural changes in our working capital performance.

But very difficult to quantify precisely.

I suppose one of the strong [items] of delivery has been working capital during the course of the year.

And I think particularly on the receivables front, in a year with intense credit pressures, we have seen no significant deterioration in the credit quality of our receivables portfolio.

So, I think -- and in fact, we've seen improvements in a number of places, and I think, overall, an improvement in terms of the relative decline in revenues versus the relative decline in receivables.

So, I guess, when you get such a major disruption to financial markets, that's structural.

And we've been able to maintain that and actually improve it against the credit headwinds we faced in a lot of markets, and the risks in terms of the payment, which I think we've managed to deal with very successfully.

Thanks.

And then, secondly, on the cost savings, on slide 17, when you're talking about 40% of the gross savings being permanent, what is the cost saving we should expect year-on-year?

Albert?

[40% plus].

Michael, across the whole [EUR1,650 million], [we've] retargeted about [EUR650 million] of permanent costs savings, as we indicated to you in January.

I think, as was already mentioned [to Nicolas] when he [analysed the] incremental cost savings [we'll] have coming through in 2010 because you've got the EUR260 million; and of course you've go the one-off costs of EUR205 million.

So, [you're looking purely] in 2010, say, a figure there of about EUR460 million in terms of cost savings benefit 2009 versus 2010.

[The roll over of] the costs savings happened over a four-year period.

But, of course, there are other events happening during the four-year period, and we're seeing margin squeeze coming on, and I guess seeing margins fall, so it's not a straight [zero sum game]; cost out, profits up.

There are other things happening as well.

All I can say is we would expect to see the benefits of that cost saving program rolling forward into 2010.

And we would expect to see those savings coming through to the bottom line this year.

Thank you.

Okay.

I think wee seem to have exhausted -- sorry, one more here, and then we'll go to some of the phone calls.

It's John Fraser-Andrews from HSBC, again.

It's on your cement businesses in India and China; contrasting fortunes in 2009.

Can you update on whether those cement prices in Southern India have turned round, and what your pricing experience was in China?

And on the two businesses; what your investment plans are for 2010 and beyond?

Well, maybe I'll ask Henry maybe to comment on the pricing trends.

I think, on the investment plans, we have been expanding, and as you've had some announcements on that in the course of 2009, the business that we have invested in in China, it has been adding to its capacity through some Greenfield expansion, and also through some selective acquisitions, which are expanding its footprint into a third province in Northeastern China in a more significant way.

And we would expect to see some further moves in that regard in China in 2010, and we're very happy to support that program.

In India, we have a significant 50% investment in a major cement operator in Andhra Pradesh.

That has just commissioned a new grinding plant in coastal Andhra Pradesh, which widens its access to some of the more northern and eastern provinces in India.

And I think that's a very important strategic move for that particular business.

And, certainly, we'd be open to looking at further opportunities to expand that joint venture in India as well.

So, I think we believe, I think as I mentioned earlier, that we have found good platforms in both China and India.

We have found good partners, and we are keen to grow the business in tandem with the growth in the particular markets.

On the pricing, Henry, you might just comment on what trends you've seen.

Yes, in Southern India, we would have seen the price weakening throughout the second half of the year.

I think it was exacerbated by the -- there is quite a bit of new capacity coming onstream, and there was a -- there's a certain gap in the political situation there with the loss of the First Minister in Andhra Pradesh.

Now, as the months went by, that has eased off, actually has stabilized, and we've seen some small increases.

And we expect that with fairly strong growth during this year that surplus capacity will be mopped up and that prices will continue to firm-up.

In China, in our 100% owned operation, we had enjoyed good price increases last year in Sanling.

In the Thai business, which covers a bigger patch, we would have seen a positive move forward, and we would hope to see a similar move again in 2010.

Thank you.

Thanks, John.

I think we have some questions on the phone lines.

Can we move to those?

We have a question from the line of Barry Dixon.

Please go ahead with your question, announcing your company name.

Good morning.

Yes, it's Barry Dixon from Davy in Dublin.

Just going back to the US Materials business, I suppose a couple of things there.

One; you mentioned that your winter [fill] program has got you an asphalt -- liquid asphalt price below the current price.

Could you give us some sensitivity of the profits of that division to movements in the liquid price?

And maybe give us some idea of the scale of the difference between what you've bought in at winter fill and where the current spot price is on liquid?

Glenn?

As you know, Barry, whatever the price of liquid asphalt is, we try to pass on in our mix cost.

Probably, the bigger impact on profitability is when you have very high liquid prices you have high mix prices, and the State and Federal dollars don't go as far and it impacts your volumes.

In terms of what our winter fill prices are, we like to keep good relations with our suppliers so we don't like to say what they charged us for product.

You can take it that we paid more this year.

If you look at WTI, this time last year it was below $40; this year it's in the $70s.

So the price is higher.

It's not higher in proportion to the change in crude oil prices, but we paid more for it.

But the prices at the racks, which admittedly are very early, are also up so we do feel confident that we had a very successful winter fill program.

And I might add that not only did we do well with our winter fill, we also have it in a number of States where we did not have storage in the past.

We've added storage in Utah, Oklahoma, Idaho, and Central Washington.

So we've got a better balance of winter fill throughout the Group, but our suppliers wouldn't be very happy with us if we told what the prices were.

Okay.

But would you expect that it would have a positive margin kicker this year relative to, say, where the current spot price is?

Yes.

I've been in this business for 20 years, and I've yet to see a year where the prices in the summertime weren't higher than winter.

Okay.

Just --

I think the other thing, Barry, just to say is that our ability to store a significant -- and to pre-buy a significant proportion of our annual asphalt requirements is a significant competitive advantage, relative to our competitors in the various marketplaces in which we operate.

Okay.

And just going back to the previous question there in terms of State budgets, Mark or Myles, do you get a sense as to what State budgets are like?

Everything we read at the moment seems to be that budgets are deteriorating.

In terms of the $12 billion increase in ARRA funds coming through this year, how much of that are you thinking will be offset by further declines in State budgets.

I don't think -- Barry, at this stage it's very difficult to make any estimation in that regard, until we get a sense of the bids that are being let and the projects that are coming forward at individual State level, which will be starting now in this month and will probably be running through to end of May and to middle of June.

And we'll have a better sense after that as to what States will or will not be doing in terms of work level for the current year.

But I think there is a significant step-up in ARRA stimulus funding this year, which hopefully will support good levels of highway resurfacing, and indeed some new projects.

Okay.

And just one last question, in terms of moving to Poland.

The January Cement Association numbers were desperate; they were down -- volumes down 58%.

Have you seen any improvement in trends in Poland?

And I suppose maybe an add-on to that is have you made any change in your plans in terms of the build of your new cement plant there?

You had put it on hold, any plans to take that off-hold in an environment, where you talk about in the statement, of improving demand in the Polish market.

No, I think that project would still be, if you like, suspended, and we'll be making a decision on that in the course of 2010.

I think the thing to bear in mind is that, traditionally, the cement sales in Poland in any year in the first two months tend to be a relatively low proportion of the annualized sales.

So there is the potential to pick-up what was lost in the earlier months in Poland over the remaining months of the year.

And, Henry, you might just say on how you've seen things over recent weeks as the weather has improved.

Yes, just in the last week, certainly a thaw has set in and sales have reached what we would have budgeted, and have exceeded the same week last year.

Now, that's just one week.

But certainly we'd be hopeful that the weather will lift now and that things will get back to normal fairly quickly.

Okay, thanks very much.

Any other questions on the -- from callers?

Our next question comes from the line of Robert Eason.

Please go ahead with your question, announcing your company name.

Hi.

It's Robert Eason here from Goodbodys in Ireland.

And apologies if some of these questions are repeat; the quality is bad in places.

Just in terms of the Netherlands, can you just give us a bit of better flavor in terms of how activity levels progressed during the year?

Because I think in the statement you highlight, in particular, the DIY operations were a bit more difficult in the second half.

Just a follow-on question on the asphalt; can you just remind us, firstly, what is your total requirement in terms of volumes of asphalt, and how much of that is made up of winter fill now given that you've already highlighted that you've expanded those operations?

And I know you weren't too keen in giving out the price that you've done the winter fill on, but could you give us the average price of your asphalt for 2009?

And just, the other question would be on MMI.

Can you give us a flavor in terms of the extent of the losses in that business?

And is there a risk of a goodwill write-down there given that that was purchased, if my memory serves me right, only a couple of years ago?

A lot of questions there, Robert, but maybe, Mairtin, on the Netherlands, if you'd like to?

Yes.

Robert, the housing sector in the Netherlands is difficult.

The expectation this year is that perhaps we'll have about 62,000 completions, and that's coming off 72,000 last year.

And as I said earlier, that's likely to continue to be difficult also into 2011.

One of the things to remember is that the number of secondhand houses sold we monitor also because it's an important element of the RMI business.

And the numbers -- these are given out by the real estate agents in the Netherlands, the number dropped significantly in 2009 but is expected to increase in 2010.

So, we'll see a fill-up from that but certainly not enough to compensate for the downturn in housing.

Commercial is also difficult, and that goes back to one of the points we made earlier on about the pressure on structural concrete.

Infrastructure is more robust.

There's been good stimulus packages from the government to get that up and moving.

We have a significant part of our business related to RMI in the Netherlands.

And as we say, the Do-it-Yourself business performed better than the other distribution companies in '09.

And we expect, and particularly as private consumption is expected to increase by about 0.5% this year, relative to a decline of about 2.4% this year -- or in '09, that we should some improvement there.

But all-in-all, some positives, but certainly it's going to be challenging '10 and '11 in the Netherlands.

Sorry, just on that, just how did the DIY like-for-like trend in the Netherlands through the year?

We saw -- we've a very, very strong brand in the Netherlands.

And throughout the year, we saw some difficulty in the beginning; it picked up in the second quarter; and then, towards the end, it stabilized.

But the decline was significantly below, almost half, if you like -- and I think that's in the figures that Myles gave earlier on, was about half relative to the Distribution business.

You had some questions in relation to the liquid asphalt business, Robert.

Our annual consumption of liquid asphalt is probably about 1.8 million/1.9 million tons in the United States.

And we would have storage levels for about 40% of that; a little over 40% of that I guess, Glenn?

Yes -- well, over 800,000 tons of storage throughout our operations.

And, Robert, the changes in energy prices are in our statement that we released today.

Overall, asphalt prices were down about 14% in 2009; and our diesel gasoline burner fuels, they were all down in the range of 33%; natural gas was lower by 25%.

And the question just on MMI?

On MMI, well, as I mentioned, MMI had a very difficult year; sales down 40%.

Significant challenges as a result of declining steel costs, and very significant restructuring across the business, so the operating loss in MMI in the course of the year would have been about $100 million.

About $50 million of that would have been on the restructuring side for that particular business.

But it would have remained cash-generative, notwithstanding those significant losses, in the course of 2009.

Okay, thank you.

We would look to a better year in 2010, obviously, from it.

And there's no risk of goodwill impairment there?

No.

Well, I think we've done our goodwill assessment, Glenn, in relation to all of the businesses?

Yes, we did have one impairment within one of the business units within MMI; it was about $7 million or $8 million, Robert.

Okay, thank you.

I think we're probably pushing on time-wise.

I'm not sure whether there are many other questions on conference call.

We have a question from the line of John Sheehan.

Please go ahead, announcing your company name.

Good morning.

It's John Sheehan here from NCB in Dublin.

I just had a few questions.

One; you stepped up, Myles, in the tail-end of last year the M&A push, and just wondering if you'd give any update on activity post the year-end, and is it again focused on the heavy side, typically?

Secondly, just detail on the profit on disposals; any sense as to what -- how they will come in even in relative terms year-on-year in 2010 over 2009?

And then just in relation to Polish and Ukrainian cement processing, and apologies if you touched on it earlier, you mentioned intense competition in various product areas in Poland; I was just wondering how prices trended there and how you'd see both it and Ukraine prices moving in 2010?

Thanks.

On disposals, obviously, the figure in 2009 was lower than '08; a number of assets which we would have been hoping to sell actually didn't go through in the year.

So I think at this stage it's very difficult to project a level of profit -- of profits on asset disposals for 2010.

Probably, a similar level to '09 would probably be the best indication at the current stage.

On the acquisition side; obviously, some good activity towards the end of the year, particularly on the heavy material side where we've been continuing to see an increasing flow of potential opportunities, particularly in our US business, but also some opportunities emerging on the European side.

And we'd hope to see some further activity as we move through 2010.

But nothing of significance completed in the first couple of months of the year, but certainly a better flow of opportunity.

And also, maybe in some of the other product segments, Distribution is an interesting area for us as we look at the business at the moment, particularly on the European side, given its resilience in 2009.

Sorry, you've one other question there?

Just in relation to cement prices; how they had trended in Poland and the Ukraine, and how you'd expect them to move in 2010.

I think that prices, it's not surprising, were down in the Ukraine last year.

I think we hope to see greater stability this year.

Henry, do you want to comment?

We would be very competitive in the Ukraine because we burn coal and many of our competitors are still on gas.

And we would -- we don't see prices dropping.

We would, in fact, hope that prices would firm-up a bit on [force] of higher gas profit.

In Poland, we would be looking for prices to be similar to 2009 levels.

Great, thank you.

Maybe we'll take one more call on the line.

Our next question comes from the line of Paraic Quinn.

Please go ahead, announcing your company name.

Morning.

It's Paraic Quinn from Bloxham in Dublin.

Just two quick questions.

First, in terms of the cautious outlook, in terms of the European market, and I know you mentioned companies -- or country-specific, Ireland, Finland, where you saw -- you see a small pick-up typically in the Netherlands.

I'm just wondering, beyond that, is it really the Ukraine that's of particular concern?

Or is there any other country since your last update?

And second of all then, my final question, in terms of on the development front; just wondering, in terms of vendors' expectations and whether you've seen them become more aligned with your own thinking as you've moved through the initial part to 2010.

Well, I think certainly the fact that we had a pick-up in activity towards the back-end of '09 would have indicated that vendors' expectations were coming more in line with our levels at that particular point.

And I think we continue to see, as I mentioned a minute ago, some interesting opportunities as we move forward into 2010.

On the economies in Europe, I think Ukraine; obviously, a tough year last year and a lot of political uncertainty.

I think we see it as more stable, hopefully, given some recent political developments.

I think we see Poland picking up.

I think the peripheral countries; obviously, Ireland remains very difficult in terms of the construction outlook.

But it's a very small component of our overall activities at the moment.

Spain continues to be a difficult market.

Finland had a very tough year last year for a country without any excessive imbalances, either on the banking or on the property markets.

We'd hope to see greater stability there too as we move through the year on the heavy side.

Okay, thank you.

I think we've one more on conference call.

Our next question comes from the line of John Mattimoe.

Please go ahead with your question, announcing your company name.

Good morning.

John Mattimoe from Merrion.

I'm glad that I managed to squeeze in.

Just three questions, if I may.

Just, first off, in relation to your outlook comments, obviously, there's still a lot of uncertainties in the markets.

And I was just wondering whether your tone has been colored by any increased underlying uncertainties, or whether we should just interpret it as very low seasonality exacerbated by the prolonged winter conditions.

My second question is just in relation to the tax rate.

Was there any tax related to the impairment provisions?

In other words, did that provide a tax shelter?

Or is the EUR134 million tax would have been the same tax rate on the EUR773 million pre-impairment/pre-tax profit?

And lastly, could I just ask you if you could just go back over just the ARRA figures for the highway element; what it was in '09, and what do you expect it to be in 2010?

I just didn't catch you when you mentioned it earlier.

On the ARRA figures in '09, we estimate that spending was somewhere in the order of [EUR6 billion], and that's roughly expected to double in 2010.

Glenn, on the tax split?

Yes, there's no tax benefit from taking book charges to -- on impairments, so the tax figure remains unchanged for those items.

With regard to outlook, John, obviously, I think you've put your finger on it with regard to seasonal factors.

January and February obviously are very quiet months across our particular activities, given our northern hemisphere bias.

And obviously this year, with the tough winter, it makes it more difficult to discern underlying trends as opposed to weather trends.

So, I think we'll be in a better position, with our AGM statement in the first week of May, to provide more detailed guidance with regard to what we see in the more active months as we move into those in March and April.

Is it fair to say then, Myles, that you just haven't seen enough to see whether there's any change, good, bad, or indifferent, in the underlying trends then?

Yes, I think as we -- if you look at our like-for-like sales trends, they were improving steadily as we moved into the second half of last year, and particularly though into the final months.

But, obviously, the weather effects that we saw in January and February would have set those back somewhat.

So, differentiating between weather and underlying trends is just difficult in any year, and I suppose more particularly in the circumstances we're in at the moment in these early months.

And so I think, hopefully, we're looking into [it].

Henry has mentioned earlier, we have seen in Poland, for instance, as the thaw has set in, we've seen a significant rebound in activity there.

And hopefully that will be more widely evident across the operations as weather begins to warm-up a little and as the spring comes.

Okay, thanks.

And just lastly, on the AGM statement, will you give a [year-to-date] run rate on the acquisition spend at that stage?

I guess we will be, yes.

Okay, thanks very much for that.

Okay, thank you.

I'm conscious that we've run on quite a long time.

We have some question on webcast.

We will not forget about you; we will actually come back to you over the next couple of hours in responding to those particular questions.

I'd like to thank everybody who turned up this morning, everybody who listened in on webcast, and on the conference call.

Thank you for your attention, and have a good day.