CRH PLC (CRH) 2010 Q2 法說會逐字稿

Okay. Good morning, everybody. And welcome to the webcast this morning which accompanies the release of our interim trading results for the first half of 2010. I'm joined here this morning by my colleagues, Maeve Carton, our Finance Director, and by our Chief Operating Officer, Albert Manifold.

What we'd like to do first of all is to run through a brief presentation and then open up for questions and answers which we'll be taking from the floor here in Dublin, we'll be taking on the phone lines which will open, and also we'll be receiving questions over the web.

What I'd like to do first of all is just summarize the trading outcome for the first half of the year, say a bit about our development activity year to date, run through very briefly the results by operating segment. I'll then hand over to Albert who will provide you with some commentary on the trends we've seen in our Americas Materials business through the first half of the year and over recent months. And, as we have outlined in our statement this morning, the outlook for that business for the second half of the year is somewhat tougher than we would have expected some months back. Then Maeve will provide some additional detail on the financial aspects of our first-half performance. Then I'll return and say some brief words about outlook.

So, looking first of all at the results for the first half of the year, the outcome was very much in line with the IMS guidance provided in early July. We indicated then that the cumulative like-for-like sales declines were moderating progressively, or had moderated progressively as we move through the first half of the year from declines of over 20% at end February impacted by a very severe winter in both North America and Europe, to a like-for-like decline for the overall first half of around 10%.

Reported sales, which include acquisitions and translation effects, were down 8%, at EUR7.7b. EBITDA, as we indicated, was down roughly 20% at EUR520m, with the bulk of that EBITDA decline occurring in the first quarter of the year. Operating profit down 51% and profit before tax for the first half of the year at EUR25m. And we guided in the July IMS for an outcome close to breakeven. With a strong balance sheet, we have maintained our interim dividend at the 2009 level of EUR0.185.

Looking at development activity, and again, the first-half spend of EUR159m would have been outlined in our July IMS, included 13 transactions and an increased equity input into our Chinese associate in order to fund some development moves for that particular business, which is expanding its capacity in northeastern China. But also in the first half we did nine bolt-ons in our Americas Materials business, and four bolt-ons in Europe Materials.

Since then we've actually spent a further EUR90m or so on five transactions. The two most significant transactions in that particular package of spending would have been the acquisition of a 75% stake in a distribution business in Belgium which is focused on the sanitary, heating and plumbing aspects. And, as you're aware, we have similar businesses in Germany and in Switzerland which have been performing well because they target the RMI, and particularly bathroom refurbishment in the European market, which is an area which is showing growth.

We also bought another US Materials business in Texas, an asphalt business in the Dallas/Fort Worth area, which adds to our existing positions in those markets. And we did some other smaller deals in Switzerland, in Maine and Colorado in the aggregate side in the US. And we also funded some additional investments in northeastern China by our joint venture equity partners.

Too late for inclusion on the slides and in the announcement today was the fact that just yesterday evening we signed an agreement to acquire 90% of an aggregates and ready-mix business in Switzerland, which is a significant bolt-on for our existing cement, aggregates and ready-mix concrete platform in Switzerland. This is a business with about CHF100m of sales, EUR75m sales. We can't disclose the actual consideration for that particular deal because of confidentiality arrangements with the private sellers. But it is a good complement to our existing positions in Switzerland.

So we are continuing to be active on small/medium-sized bolt-on opportunities across our business. And we do see continuing opportunity to maintain that flow of deals, despite the challenges in the marketplace.

Looking first of all at the overall outcome for our European operations, tough trading, very much exacerbated by the severe winter. Like-for-like sales in the first half of the year were down 9%. But we saw a moderating trend there after a very severe decline in the first quarter, with the second quarter like-for-like sales down 5%. Overall for Europe, EBITDA was down 17%. Materials showed a decline of 7%, Products 28%, Distribution 15%.

The results do reflect lower restructuring costs. Our restructuring costs in the first half of this year were around EUR25m compared to EUR41m in the first half of last year. And there are also some translation benefits there as well in the overall first-half results, arising from the weakness that we saw in the euro in the first half of the year, but obviously some of that has been, if you like, redressed with the stronger euro that we've seen since midyear.

Looking at Europe by segment, in the Europe Materials business, we saw a tough outcome there. Weather difficult in the first quarter, as I mentioned, but we saw more positive volume trends as we moved into the second half of the year. And we've shown you there the half-one changes in cement volumes and also the second-quarter changes. And you can see the moderating trend there across -- the improving trend, indeed, in a number of countries.

Pricing is more competitive than in 2009 right across the piece. But the input costs are broadly stable. And, as you can see there, despite the tough backdrop, we were able to maintain our EBITDA margins in the first half of the year.

Europe Products, more difficult backdrop here. Half-one like-for-like sales down 10%. Again, a moderating trend there, but our concrete business is seeing very difficult backdrop, particularly in its non-residential-oriented structural operations, where there's intense competition for volume, and pricing has suffered.

In our Clay division, profits have improved. And this is largely due to an improved backdrop in the UK, where we've seen a good increase in brick industry volumes and indeed in our own volumes in Ibstock. Also in Holland, the -- while the new brick for residential is down, we have seen a pickup in paver demand which largely goes into refurbishment in local authorities. And our Building Products business in Europe Products, which is also exposed to non-res, also had a tough first half, reflecting weaker non-res demand. So difficult segment here in the product space in Europe.

A more positive picture on the Distribution side in Europe, more robust performance than in Products. And so this reflects the fact that our Distribution business is primarily exposed to the repair, maintenance and improvement segment, which is obviously showing better trends than in new build.

Our restructuring costs over the last two years have limited the margin decline here. In the Builders' Merchanting business, market in Holland was tough. But the declines in Holland were partly offset by improvements in our Swiss business and also by a further improvement in our Austrian business. And you may remember some years back the Austrian business was quite challenged, but we have done significant restructuring there and have seen an improving trend in our Austrian distribution business which we will expect to continue.

On the DIY side, again, retail spending in the Netherlands has been softer than it would have been in '09. And our DIY business also showed some declines. But they wouldn't have seen as severe as those in the Builders' Merchanting, which probably is to be expected because, again, DIY would be more in refurb and redecoration.

So that's the, very briefly, the backdrop across the European segment. If we move on to the US, first half overall, we had, as we would have mentioned, weather effects in the first quarter. Continuing difficulties with weather in our Materials business, particularly in May and June. In dollar terms, first-half sales were down 10%, obviously much more severely affected in the first quarter, with an improving trend.

EBITDA overall down 26%. Materials most affected, down 44%. Products down 6%. Distribution actually recorded an improvement in EBITDA and we'll come to that in a moment. Lower restructuring costs here in the first half of the year.

Some modest benefits on the exchange side when we translate our US dollar and Canadian results into euro. The actual average rates were pretty similar for the first half of the year. There will be a more significant translation benefit for the year as a whole, given where the dollar has been trading since the middle of the year; probably not as strong a translation benefit as we would have expected some months ago as the euro has strengthened somewhat against the dollar over that period.

Looking at the Materials business, prolonged poor weather, delays in budget approvals. You can see here the heritage volume declines that we experienced in the first half of the year. They were moderated somewhat by the impact of acquisitions so overall volume declines were less severe than the underlying heritage volume declines when you factor in acquisition.

On the pricing side, we managed to deliver a modest increase in aggregates pricing. But it has been more competitive in asphalt and ready-mix and on the construction side of our business in particular. And Albert will go into the trends we've seen in this particular business in the first half of the year and the outlook as we see it now for the full year in a few moments.

On the Products side in the US, obviously the backdrop remains challenging. Residential continues to be at a low ebb, with some mixed statistics in terms of outlook. Non-res obviously continuing to suffer. But we did see some positives in this particular business. Our Architectural Products group actually reported an improvement in profit in the first half of the year. Again, repair, maintenance and improvement demand in the business that goes through the Home Center was more positive. And they do have a presence in Canada, which the economy there is obviously performing strongly and they did well on the back of that.

On the Precast and on the Building Envelope side, both businesses exposed to non-res. Both suffered, and combined profits here were down significantly. Building Envelope is the new term for our glass business, which has been expanded over recent years with acquisitions in aluminum storefronts and also in contracting large contracts, glazing for large-scale buildings. So the glass title for that particular group didn't quite cover its expanded activities and they have been rechristened Building Envelope.

MMI, an improved performance there, lower operating losses, largely due to restructuring measures, also some lower write-offs on inventory which would have impacted its first-half results in 2009. So, with the benefit of cost restructuring and lower restructuring cost, you'll see there that the margins are similar to the first half of 2009.

Our Distribution business in the US, you can see here, as I mentioned earlier, good profit and margin improvement, driven very much by cost reduction measures and significant adjustments to branch network and also to overhead levels in this particular business over the last 18 months or so. Some signs of improvement in our Exterior Products business, which is roofing and siding, in the first half of the year. Actual sales for the first half in total, after a very tough first quarter, ended up slightly ahead for the first half of the year. The Interior Products, which are aimed more at new build commercial construction, continued to suffer. But a good picture here on our Distribution business. And we'd expect these trends here to be maintained for the year as a whole.

So if we look at it overall in terms of EBITDA margins for the first half of the year, it's a varied picture. Overall Group EBITDA margin was down about 1%. But, as you have seen from the segmental presentations there, good improvement in US Distribution. Americas Products and Europe Materials EBITDA margins are broadly stable, despite like-for-like sales being down in the order of 10%, which is a good outcome. Europe Distribution margins slightly lower. Europe Products impacted particularly by the weakness in non-res and in structural concrete operation. And our Americas Materials business, certainly in the first half of the year, suffering from weather effects and the operational inefficiency associated with that.

So that gives you some picture of the overall trends across the six main business segments in the first half of the year.

I'd now like to hand over to Albert, who will cover Americas Materials, what we have seen there in the first half of the year and the trends we have seen developing as we moved into the second half, and the outlook that we see for that particular business for the year as a whole.

Thank you, Myles, and good morning, everybody. I'm going to give you a sense of where our America Materials business has been for the first six months, look at some of the volume trends across the products and the geographies, look at the -- in detail go through the first-half performance, look what the outlook is like for the remainder of the year as well.

This chart here just takes you through some of the historical volumes we've seen in 2009 and, indeed, 2010. And, just to be clear, the chart shows the quarterly movements on the actual volume by product, our main product areas. So, in Aggregates business there in quarter one 2009, the aggregate volumes were 32% down on the comparable quarter in 2008.

During the course of 2009, as you can see, on the back of the stimulus packages in the United States, we saw moderation in the rate of decline as we move through the quarters, particularly so in the area of asphalt, which benefited from a lot of the ready-to-go work when the stimulus packages came on stream about halfway through last year, as such.

In the first half of this year, as Myles has already mentioned, we saw a lot of adverse weather in some of our major regions and that got us off to a very slow start. In addition, on top of that, we had some very wet weather in some key states in May and June, which is early season for us as well, but important. And of course there was uncertainty related to the finalization of some state budgets which gave us, again, a lack of confidence for people to commit to expenditure. But, against that backdrop, we have seen a moderation in the rate of declines as we've gone through this year, albeit at a slower pace than we would have anticipated.

I just want to take you through this. It's a detailed map, but it's an interesting map in terms of looking at the volumes and where our region split of our businesses are. If I can start out West, so from the Pacific Northwest in the orange, this is our Northwest and StakerParson business. Out West we are much more exposed to private sector, so about 50% infrastructure and 50% private, which is residential and non-residential.

Now, in the Northwest, being exposed to that 50% of the private sector, which has been very weak, that, against the backdrop of some very difficult state budgetary environments, has meant that our Asphalt business out there has suffered quite a bit. However, we've had some very good project work, particularly in some interstates, and particularly down as we go down south down to Utah, which meant we've had quite a solid performance in our Aggregates business up in that region.

Moving across to the purple area, which we call Rocky Mountain and Midwest. Again, more exposed than the East would be to the private sector. Again, the weakness there, backed again -- this time we've hit some very wet weather in the earlier part of the year. Again, that impacted us and got us off to a very slow start. And that impacted on, of course, volumes both in Aggregates and, indeed, in Asphalt. We had in 2009 some very good work in the state of Iowa, which is a big state for us. But unfortunately, the ARRA funding work got off to a good start in 2009 and left a big hole in 2010 in terms of volumes.

Moving to the South, the region colored in red. Again, it's been a difficult market for us. More highly exposed to infrastructure, up to 70% now, at this stage. But again, a slow start and a very wet and cold start to the year, particularly out west in the states of Texas, Oklahoma, Kansas, Arkansas. But again we're seeing those states coming back. Florida remains quite difficult. But again, as we're seeing out west, those states which suffered in the earlier part of the year with regard to some difficult weather, we're seeing them start to come back in states such as Texas, which have got a well-funded highway program, are starting to deliver now.

Moving to our Central and MidA and the Northeast, our two more important or two biggest regions, I think Central and MidA, again, with a high exposure to infrastructure, 70% of our business there goes into infrastructure. Well-funded ARRA projects, stimulus-backed projects delivered a very solid performance both in Aggregates and Asphalt, in particular in our two key states of Ohio and Michigan.

And then moving up to the Northeast, unfortunately our Aggregates business suffered, primarily as a result of very slow take-up in the New York metropolitan area in construction. We supply a lot of aggregate to concrete producers in New York. And that not only affected shipments from New York State, but also from New Jersey and Connecticut. However, and despite the fact that there was some uncertainty about budget approvals, in particular in the key states of New York and New Jersey, our asphalt volumes were quite good.

Looking at the first half of the year and going down through product by product, you can see the bulk of the decline was actually really in two products, Asphalt and Construction. Looking at our Aggregates business, actually I think we managed it well. We had a slight up-tick in price. And I think we had good, strong cost management. And that delivered with a good commercial management and good performance in our Aggregates business, and relative to our peers, a relatively resilient profit performance.

On the Asphalt business, as Myles mentioned, we suffered with regards to the lack of volume throughput through our plant. And that led to some difficulties on unit cost. On the back of that, although we got pricing up, we've suffered an increase in liquid asphalt. And those prices have been difficult to pass on because of the intensely competitive environment. However, and I know clear comparison is much more difficult when you look at our Asphalt business, but when you do go and study the peers who are out there, I think you'll see we did benefit from the results of our winter-fill program, as we do every year.

On the Ready Mix business, again, that suffered as a result of volume and price declines. We have taken some advantage of lower cost, principally on the cement side as those prices continue to decline.

And then on Construction side, our revenues were down about 12%. There's been a lot of competition there that has driven both prices and margins there. And despite the fact that we push hard in that business, that has led to a fall in the revenues in that part of our business.

Now just looking what's happened since the half year, the trends in our business for July and August, if I can just deal with the public work first. The backlog for our business, which is primarily going into public work and the ARRA/SAFETEA-LU-funded projects, they are good; they've been good through July and August. However, there is increasing evidence of a pull-back on the state and municipal level on work programs. In addition to that, we get a sense that work that was outlined and set out for 2010 is being pushed out to 2011.

On the private side, the expected pick-up that we would normally see in July and August, which are the first of our two big months, didn't materialize, particularly so on the private side, but also on the -- we see on the short-term state and municipal work, that just did not come through. And across both the private and public sector, we've seen an intensification of competition which put pressure on pricing as well.

Looking at our outlook for the full year for America Materials, I think the message in our Aggregates is this is a well-managed business. We do a good job here. We see volumes being flat. We see prices being up and we see unit costs being down. And we expect to see the benefits coming through of better operational performance and good cost management and good commercial management.

On the Asphalt side, we expect it to remain challenging but we expect to outperform our peers. I think the softness we've seen in half one is expected to continue. And the problems we've seen in the margin also with regard to the inability to pass on costs are to keep those margins under pressure.

On the Ready Mix side, the weak background of residential and non-residential again is going to impact upon the volumes in that business, albeit it'll be offset by some good contributions from some of the acquisitions we made in late 2009 and the early part of this year.

On Construction, again, despite the ARRA stimulus packages coming through, there is weaker state activity. And we think, again, that is going to feed through into a lower top-line number with both pricing and margins for these reducing revenues by about 10%.

So overall, if we look at where we are now, two months into our really busy season of July and August, and taking the run rate of those two months and extrapolating it out for the full year, we can see our EBITDA in dollar terms for our US Materials business to be down about 20% on last year, and that's extrapolating out the run rate we've seen in July and August.

I think it's worthwhile just taking a moment to reflect what are we doing in the face of this. This is a once-in-a-generation, once-in-a-lifetime situation. We've seen unprecedented volume decline, price declines, overcapacity in the industry. What we can do is focus on the things that we can impact upon, focus on making sure our costs are as low as possible, focus on crucially on generating as much cash as possible, and focus on where we can see it delivering on acquisition opportunities that create value for our business.

And I want to stress to you that the US Materials team, we all are determined and committed to ensure the industry leadership that CRH has shown in our industry in the United States for decades, we're determined to ensure that stays in place and to ensure that US Materials is positioned to benefit from a recovery when it comes.

And just finally to remind us of exactly about CRH in the United States, and in particular about US Materials in the United States, CRH is the largest building materials business in the United States. We operate in all 50 states and in four Canadian provinces. We have 30 years of industry experience of delivering industry-leading returns across all types of cycle.

Our US Materials business is the largest integrated aggregate, asphalt and paving construction business in the United States. We are the only national heavyside player, with the largest footprint of any of our competitors, and with over 11b tonnes of permitted aggregate reserves. We're a strong focused player who, in the past, has shown an ability to deliver industry-leading returns. And, backed by the balance sheet of CRH, our team in US Materials is focused on ensuring that we use that cash that's available to us to continue to grow our business for the next 30 years.

So, with that, I'm going to pass over to our Finance Director, Maeve Carton, who's going to take you through some of the finance details.

Thank you, Albert, and good morning, everybody. Myles has already run through for you the trading results by operating segment. What I'm going to do is focus on some of the key financial numbers, with particular emphasis on the cash flow items and also on our balance sheet metrics, which remain very strong.

The first slide here is just recapping the key numbers for you that we've already spoken about. The EBITDA decline that's shown here of EUR131m represents a decline of 20% for the first half of the year, with a depreciation and amortization charge that's broadly the same as the first half of last year. That same euro decline in the operating profit figure has a much bigger percentage impact so the operating profit decline is 51%. Our interest charge reduced by about EUR38m in the first half of the year. And the net effect of that is that the decline in profit before tax is 77%.

As you can see, on our per-share figures, the decline in EPS is broadly in line with our decline in profit before tax. But our cash EPS, when we add back our non-cash items, is very much in line with EBITDA, with a decline -- showing a decline of 21%. And our dividend per share has been maintained, and I'll come back to that in a little while. So overall here, the actual outturn is very much in line with the guidance which we gave in early July.

This slide here shows how our operating -- how our trading performance results in an operating cash outflow for the year -- or for the half year, of EUR653m. The key movements to focus on here would be a significantly higher working capital outflow than last half year. During 2009, the Group delivered very strongly on working capital reduction, which meant that our closing working capital at the end of last year was at a very low level. So the traditional seasonal buildup of working capital to the current normal level for full activity has had a much more significant effect this year than last year.

The other big items would be the dividend. Payments during the first half are higher than last year, largely to do with the higher average number of shares in issue for this first half because of the rights issue in March 2009. And also, as usual on this summarized slide, in the dividend figure we do not -- we include the cash cost of the scrip. And when we show proceeds from share issues on the next slide, you'll see that also includes the scrip dividend.

The capital expenditure figure is lower than last year. So against the background of the trading -- the difficult trading conditions, capital expenditure, the management took significant action to curtail capital expenditure. And as you can see there, over a three-year period, the capital expenditure for the first half has reduced very significantly.

So overall, with significant investment in working capital for the first half of the year and also lower profits, our working capital outflow for the first half is significantly higher than last year. However, we do think it's worth noting that it's broadly in line with the working capital outflow in 2008 in spite of significantly lower profits, with the key action taken by management to reduce capital expenditure being the main factor in that achievement.

Net debt at the balance -- at mid-June and midyear, it's typically much higher for the Group than it is at the balance sheet date -- at the year-end date and that's largely because of the seasonal working capital requirements. So this slide shows how the working capital -- the operating cash outflow of EUR653m is the major factor in the increase in the debt from year end 2009 of EUR3.7b to our closing net debt at the end of June of EUR4.76m(Sic-see presentation slides).

The other items in the movement are the acquisitions and investments spend is a little bit lower than this time last year. Our proceeds from disposals of fixed assets is broadly in line with the last few years. Our share issues, as I mentioned, includes the scrip dividend and is largely, as well as just the exercise of share options.

So the other big number there is the translation figure, the negative translation figure of EUR452m. That's largely as a result of the weakness of the euro compared to the dollar at the end of June. So the rate at the end of June this year was $1.23 and at the end of last year was $1.44. So that strength of the dollar and weakness of the euro had an adverse impact on our debt number and was the other big factor.

However, that weakness of the euro also had a very strong impact, a positive impact on our equity number, which increased by almost EUR900m as a result of the exchange rate. And the combined effect of those two things on our debt/equity ratio is that at the end of June the debt/equity ratio is a full 10 points lower than this time last year.

This slide here shows the key metrics, the financial metrics for the Group. The total debt number -- the debt to net equity -- the total debt to total equity and net debt to market capitalization ratios are, as we would have expected because of the seasonal working capital at the half year, they're worse than year end 2009. However, they're both -- both of those ratios are significantly better than this time last year.

And the other key ratios, net-debt-to-EBITDA cover of 2.8 times, and our EBITDA-to-net-interest cover at a comfortable 6.5 times, are among the best in the sector.

The -- against this background, as well as the strong balance sheet metrics and credit metrics, we also are very well funded. As you can see from the gross debt by maturity column there, we have no undue bunching of maturities over the next couple of years; so we're comfortable there. We also have gross liquidity of EUR2.6b as at the end of June. And that's at the point in the year when our working capital requirement is at close to its peak. So that gives us -- that positions the Group very well. It gives us a lot of comfort and strength and capacity to pursue appropriate development activities if we see compelling value for the Group.

And finally, I come back to the dividend. The -- against the -- in spite of the difficult trading conditions, our balance sheet and financial key metrics have remained very strong for -- as at the half year. We expect the traditional strong working capital and cash inflow for the second half of the year, which is seasonally much more profitable for the Group. And against that background, the Board has decided to maintain the interim dividend at EUR0.185.

The Board will take its decision on the full-year dividend in March of next year. And in looking -- making its decision at that time, the factors that the Board will take into account are the actual trading outturn for this year, the level of development spend and the development outturn for this year, and also the trading and economic outlook at that time.

So now I'll hand you back to Myles to talk about the outlook. Thank you.

Thanks, Maeve. Just to briefly refer to the outlook, I'd first of all just like to recap on the comments we made with the July trading update statement on July 7. That pointed to a circa 20% decline in first-half EBITDA and we have delivered in line with that guidance. The statement at that stage also referred to uncertainty relating to the pace of economic progress in Europe and also to the softening indicators that we'd seen at that particular stage with regard to the rate of recovery in the US economy.

We indicated as well at that time that we saw the like-for-like sales decline for the year as a whole being somewhat greater than previously anticipated. But we also indicated that we expected that EBITDA for the second half of the year would exceed the level delivered in the second half of 2009.

Since then, the economic indicators coming out of Europe have been more encouraging. But the concerns relating to the pace of the US pickup have increased. And we've seen a continuing flow of disappointing economic indicators coming out of the US.

Accompanied with that, as Albert has indicated, our own expectations for the profit delivery from US Materials in the second half are now lower than at that particular point on the back of the volumes and margins that we've experienced in July and August. And we now see that overall second-half EBITDA for the Group as a whole will not and is unlikely to exceed the second half of 2009. And, as a result, we now expect that EBITDA for the overall Group for the full year will show a decline of around 10%.

With this continuing tough backdrop right across the Group, we're obviously continuing to focus on cost reduction. And, as we move into framing our 2011 budgets, we will be intensifying our focus on the cost base across the Group. Also we're continuing to focus on cash generation, not just, as Maeve has outlined, through restraining capital expenditure, but also through looking at surplus disposals of underutilized equipment on the asset side across the business and also an ongoing review of the Group's portfolio.

And we're also, despite the tough backdrop, we're continuing to focus on acquisitions. And I think, as you can see from the development activity we've had in July and August and the recent deal in Switzerland which has just been completed, we are continuing to deliver on development opportunities, not just as it was in the back end of last year, which was focused primarily on our US Materials, but also now seeing opportunities emerging in other segments of the Group. And we'll continue to be well positioned to take advantage of that as we move forward over the remaining months of the year and into 2011.

So that concludes the presentation. We have about an hour, up until 10 o'clock left, for questions and answers. I think we'll initially take those from the floor here in Dublin, then move on to taking them over the phone lines and then deal with any questions that have come in in text on the web, if they haven't already been covered in responding to questions here or on the phone lines. So Maeve and Albert and myself will be happy to deal with your questions. Thank you.

Thanks, Myles. It's Barry Dixon from Davy. I suppose the question really is around the Americas Materials side, and I suppose a couple of things around that. First I suppose is really to try and understand what has changed since early July. You might give us some sense in terms of pricing trends on aggregates and asphalt in July and August compared to what you talked about, Albert, in the first half of the year.

I suppose second related issue is really around the second-quarter volume declines. The peers who have reported in the US would have reported volume growth of between 6% and 9%. And it's really to try and get a sense as to what the difference is between your businesses or perhaps your experiences in the market.

The third issue, I suppose, is in terms of looking out into the second half, and pricing certainly would appear to be under pressure in the second half. And maybe how does the industry operate in terms of trying to recover input cost increases, particularly on liquid asphalt, when your winter fill reserves run out?

And then final question, maybe for Maeve, just in terms of the working capital outflow. Again, just looking at the outlook for the second half, should we expect to see a greater inflow of working capital as you tighten up the metrics in the second half of the year in response to the more difficult trading environment? Thank you.

Barry, I think there are probably 10 questions in all of that. I suppose in relation to the volume trends, and our own volume trends relative to the rest of the sector, I think obviously the geographic representation of ourselves and the major peers does differ somewhat. So we don't each have a similar footprint. As you have seen from the presentation Albert gave, much of the weakness that we have seen in the first half of the year has been in the western half of the US. We have had a much more solid volume delivery in the eastern part, which is probably the part that will overlap perhaps more significantly with major peer public companies.

I suppose underlying your question, I suppose, is a question as to whether we've lost market share. Now, we're in 40 states, over 40 states in our Materials business. There's a natural ebb and flow in any particular year in terms of in the particular marketplace. But we don't believe that we have lost any significant market share overall when we look at our activities in the US.

I think the differences versus peers goes back, I think, to maybe geographic weightings in particular states and also perhaps some particular business segments and that some of the peers will be involved in. And I think one of the peers in the US who would have reported would have referred to particular strength in the segment oil-related services which we wouldn't particularly term.

So, as I say, underlying that is perhaps your question is the market share issue. We don't believe we have suffered any significant market share, whilst we have done better on pricing than the peers. We have been more disciplined on that. And we believe that when we look at our own performance, particularly in Aggregates, which is the one we can benchmark most closely with some of the peers, I think we have done very well in that in the first half of the year and will for the year as a whole.

On the pricing side, Albert, maybe you might deal with that on the asphalt.

It's a very difficult pricing environment. We have moved prices ahead, but the key issue in asphalt is not about the pricing of the end product; it's about managing the margin. And, as you know, we do get variations in the liquid asphalt prices. And it's the ability to be able to pass those through or not that's going to help or hinder your business. It's that as against the backdrop and against the volume declines we're seeing here, and the lack of volume up-tick. I think that's really the key issue here.

And people do get twitchy. And when volumes don't come through in the busy early part of the season, people drop their prices in the marketplace. And we are a player in the marketplace. We are a very big player in the marketplace. But, at the end of the day, the market sets the prices. And it's the number of players out there and the volume softness, as in all other products, that is going to impact the price.

I think the pricing that you've seen in the first half of the year and we've seen July 1 and August, I think that's going to continue for the remainder part of the year. I don't see any change to that because I don't see any big shift in the volumes. It's the volumes that will decide the pricing, as always. So rather than react to the pricing comment, I'm looking to volumes. What's going to change there? I don't think -- we've given you a forecast; it's broadly in line for the second half of the year and there's been a solid first half of the year in volumes.

(Inaudible question - microphone inaccessible).

Again, Barry, it's not a question of pricing. It's a question of managing the margin. That's the issue. So it's a question of what's the margin spread on our business, as such. I still think it's going to run -- the softness we've seen in the margin in the first half of the year against the volume backdrop is going to remain as in the second half as we've seen in the first half of the year.

Our expectation, as we've shown you on the slide there, is aggregates up about 1% in average price in the first half of the year, somewhere between 0% and 1% for the year as a whole. And similar in asphalt, slightly ahead. First half, again, we would think slightly ahead for the full year. But the margin is the key rather than the focus on pricing particularly, as Albert said, on that.

Okay. And working capital I'll take?

Yes.

For the working capital, Barry, the -- we traditionally have a big working capital inflow in the second half of the year and we would expect that to happen this year also. So we would expect for the full year to be showing an inflow. But it's unlikely to be as big as the inflow that we had last year, because it was almost EUR700m last year. And that reflected the very significant efforts and delivery last year. Obviously starting this year with that lower base, it's very hard to achieve the same level of inflow again, but it will be a positive number for the year.

Robert Eason from Goodbody Stockbrokers. Just going back to US Materials, which I'm sure is going to be the focus of questions for us, but just can you just give us a feeling how this business is broken down? It's broken down in terms of aggregates, asphalt, ready mix concrete and construction. But what are the proportions of business in terms of EBITDA across those four lots? Just give us an indication of the degree of importance.

And just given what you've seen in July and August in terms of state budgets under pressure, we're not going to have the same impact from the stimulus next year. You've still got uncertainty over multiyear highway program. What is the CRH outlook going into 2011? And can you expect things to improve in 2011 against that backdrop?

Just in terms of cost take-out, you indicated that you're going to intensify your efforts there. I'm assuming that the EUR1.7b is going to increase over the next while. Maybe when you give the trading update in November, can you just give us a bit more color around that?

And just given the degree which you are guiding down EBITDA for the full year, what does that mean for the balance sheet in terms of your ability to do deals? I can't remember the exact figure that you quoted the last time in terms of your comfort level in terms of spending money. If you can just give us a bit more on that.

And I've a funny feeling I know the answer to this, but I'm just going to ask it anyway. But just on the dividend, quite clearly, if you work through your numbers, the dividend's just covered by earnings this year. What is the feeling on that given that CRH in the past has said the dividend's very important in their minds or in your minds? So just give us a bit more flavor on that. Like is the dividend at risk? If it was, why wasn't it caught at the interim?

Okay, a number of questions there, Robert. I think in relation to the split of our activities in the US, I think very broadly, and we wouldn't want to get in too much detail in terms of split of activities, but approximately 60% of our turnover in our US Materials business is actually product-related. So that would encompass aggregates, asphalt and ready mix concrete. And you're obviously looking at high margins into -- well into double digits in relation to those activities. The other 40% is in construction, which is mainly the provision of labor and equipment. And that obviously is a much lower-margin business overall.

(Inaudible question - microphone inaccessible).

Pardon? No, that's sales. Sales. Obviously the profit status is much more marked because of the margin characteristics there. So I think our margins in the product side of the business would be similar to the margins that are achieved by the other more product-focused businesses, but there's much lower margin on the construction side of things.

With regard to going into 2011, Albert, maybe you would like to say something.

I think the backdrop in 2011, if you look at the story in the United States, I think we do see, if we look at the industry stats out there, the residential is at an all-time low. There is a forecast again to see some residential coming back. And I think our more RMI-exposed businesses can see some -- will see some benefits next year in the United States. I think non-res is going to remain difficult. And infrastructure, I think, will remain at broadly similar levels that we're seeing this year, as such.

On the European side, I think we've seen some solid stabilization and more solid performance, particularly in Eastern Europe for us, and the big materials business has been in Finland and Switzerland. We look forward to, again, to next year being again a year of growth. We've seen good volumes coming through there this part of the year. And I think again, on the RMI-exposed businesses and on the products side and in the distribution side, again delivering a good performance next year, as such.

On the cost savings, sorry?

On the infrastructure, (technical difficulty) this year [implies that] infrastructure's probably flat to down this year. Would that be -- am I misinterpreting that? And you said kind of similar for 2011, like your aggregate volumes are going to be down in the full year, aren't they?

Is that implying in the current year?

Yes.

In the US, yes, I think that the aggregate volumes will, on a heritage basis will be down for '10.

On the other questions, in relation to cost savings we will be updating whether we'll be doing that in November, we will have to decide on that. As I mentioned, the identification of cost savings is currently underway, it will be very much a detail of our budgetary process for 2011, which will not be finally wrapped up until end of November, early December, so it could be somewhat later before giving detailed guidance in relation to further cost savings. But we should be able to provide some broad indications with regard to cost savings, hopefully in mid-November with the updating statement then.

With regard to acquisition capacity, we would believe that we still have, looking out over a 12 to 18 month period, have the capacity to spend on the order of EUR1.5b provided the right opportunities come along. We are, as we've indicated earlier, we are disposing of some business units in Europe at the moment which will provide some additional funding capacity and we are, as I mentioned earlier, intensifying the disposal of surplus assets across the Group and we would expect a good flow from that over the remainder of the year.

On the dividend side, we have maintained the interim dividend. We're very conscious that one of CRH's key attributes is a strong dividend record, we're very conscious of the shareholder base which is very much value oriented, long term looks to dividend and looks to security of dividend. But each dividend decision is an individual decision by Board and will be made in relation to the final dividend for 2010 considering all the factors in spring next year.

Hi, Aisling Vaughan from Merrion Stockbrokers. Just some questions on the European (technical difficulty). Firstly, could you just give us some more color on the Polish performance Q1, Q2 and then just generally in terms of your volume outlook into H2.

And you commented that cement pricing in more competitive in Europe, could you just, again, talk about that in terms of giving some quantifying on that? And in terms of your outlook again for H2?

And then just one question for Maeve in terms of the balance sheet, and looking at the balance sheet impact from translation into year end, just say assuming current spot rates, just what sort of impact versus the interim, the impact at the interim stage on that would be great. Thank you.

Albert, maybe you might deal with Poland.

I think just starting, at the start of the year we had a very long and cold winter, so the first quarter, as we reported previously, in Poland was hurt by a very long winter and our volumes were behind on last year. However, in quarter two we've seen that come back somewhat and our volumes now are ahead of where they were last year, so we've seen a good performance in quarter two and, again, coming forward in the months of July and August.

Pricing, as you've heard from our peers and we're saying ourselves, pricing in cement is generally down, mid-single digit pretty much across Europe depending on where you are and I don't think that pricing environment is going to change. I think as we look forward to Polish volumes for the remainder of year we'll see how it goes but I have to say I think we're ahead, we're slightly ahead and I think we'll finish the year in that particular area.

Oh, sorry, (inaudible) the financial impact on debt is likely to be about EUR300m at current rates.

But it is sensitive obviously to any movement, particularly in the dollar.

Good morning. Paraic Quinn from Bloxham in Dublin. I have a few questions. Just first on the working capital outflow, the EUR500m, I'm just wondering any sense in terms of what that outflow, where there would have come in if you were to reverse out the action of the last 12 to 18 months in terms of tighter payment terms and tighter levels of inventory that you're holding? So maybe that's one for Maeve.

The second one was just in terms of, on the asset impairments, just given the lower profit outlook for the full year and the expectation that you do your impairment test twice a year, just whether anything has been flagged or your expectation there? I know we had MMI previously.

Then just in terms of, you see -- say about acquisitions a bit of pick up since the half year and including the Swiss deal yesterday, I'm just wondering is that a sign that vendors' expectations have improved maybe even marginally since then?

And then finally, just on the financials, can you give any sense in terms of finance costs H1 versus H2 and similarly your expectation for the full year tax rate.

Okay, I suppose on the vendor expectations, I wouldn't say we've seen any significant change in terms of vendor expectations over the last six or nine months. I think we're taking a dissident approach in terms of negotiation and the pace at which we're progressing these deals, but I think we are seeing more opportunities emerging and I suppose a widening out as well too, as I would have mentioned in the presentation there from, I suppose, the back end of last year when the opportunities that we were seeing at that stage were primarily focused on our Americas Materials base. We have seen delivery in other segments of the Group thus far this year and we hope to see that continuing also to broaden out.

With regards to finance costs, Maeve?

We'd expect them to be about double the half-year figure and our tax rate, at the interim stage what we do is estimate roughly what we think the tax for the full year will be and apply that to the interim numbers. So at the moment that figure is 20%.

On the working capital, which you also asked about, generally our working capital metrics are very much in line with last year and the year before we we've seen no real worsening of our metrics and that's as a result of very significant efforts across the Group to monitor credit, take a lot of care in managing the working capital. So the underlying metrics in those numbers hasn't changed very significantly.

And one area obviously which particularly -- which has impacted the outflow would be our inventory on the liquid asphalt side, as Albert would have mentioned in the presentation, the costs there are higher obviously than they would have been last year. So there is an element there which will reverse as we utilize and wind down that liquid asphalt inventory towards the year end which underlies our guidance for an inflow for working capital for the year as a whole.

On the impairment side, there've been no impairment charges in the first, in the interim results. Obviously we will be repeating all of the asset impairment tests after year end in the light of the trading outlook at the time and whatever is required at that particular stage will be reflected in the full year results. But you referred particularly to MMI, they have had an improved performance in the first half of the year, but it's still a difficult area for the business.

Tim Cahill from Davy again. You mentioned about the ARRA money trends that, I think you said something like some of it's been pushed back until next year or (inaudible). I was just wondering why you thought that some of the ARRA money would be pushed back until next year?

Then my second question on the US Materials was in relation to state budgets. I mean obviously there's a lot of debate now as to how the general financing of state budgets are, is that part of maybe the volume weakness that some people are talking about?

And the third question, which is more of a strategic one, you mentioned a bit of a widening of the scope on acquisitions, I was just wondering how you're weighing up emerging market deals now versus developed market? Is the US still one of the more attractive markets or are places like India and China now looking maybe slightly more attractive? Thanks.

Albert, maybe you might deal with that latter point.

Sure, if I take the last point first in terms of the emerging market environment. We've always made it clear that we focus on acquisitions where we see value and we've been cautious and careful how we proceed into emerging markets. I look at some of the performances we're seeing now in emerging markets and we're starting to see some of the numbers come off a bit, the volumes that we've seen in the past number of years have started to become a bit softer and price is starting to come off in those emerging markets. Again, I think emerging markets are a long-term play, we take our positions there, we take good strategic positions and we're building those slowly and carefully and cautiously, but only when we generate returns.

As Myles has said, we broadened our footprint happily this year in terms of deals that we've done. That wasn't a deliberate decision to broaden the footprint; we had to react to people who were going to sell their businesses. We focus on buying value-enhancing acquisitions where we see them and our rate of spend has been good and strong for the first half of the year, but I think when you look back and we had the capacity to do deals last year, actually I'm quite happy that we didn't do deals last year because I think we'd have looked rather foolish if you look at the volume declines and profit declines the business would have suffered if we'd done those deals last year. So the cautious disciplined approach that's underpinned CRH's acquisitions policy for the last 30 years, again, shows it's the right thing to do, and we need to be just cautious in this time of great uncertainty.

So we apply that across the board. We're conscious of the emerging markets, we've got good positions there but only where we see value-enhancing acquisitions there.

On the funding, on the state funding, of course state funding is going to have a huge impact on where you see construction. Again, the ARRA funding, the slippage we've seen there, it's anecdotal evidence and we can see it ourselves. The slow pickup we've seen in state and municipal work, which wasn't necessarily in our backlog, but the work that comes in every week, every month, as it would normally do in July and August, just did not come in to the same extent that you would expect in July and August. Part and parcel of that, and anecdotally we've heard a pickup, that work is being pushed out. So that's why we're saying and drawing the conclusion that some of the ARRA funding is being pushed to next year, the states just haven't got the money, so that's going to be a big part of (multiple speakers),

So it's a combination of red tape and ability to match funding.

A lot of states are very stretched in terms of funding and they've got a lot of calls on their public purse and construction and highway building is only one part of it and they've got to balance their book. So, as in our own country, in that country things get pushed and it's the [word] coming through now at this stage.

And while that was the ARRA wasn't depending on any state funding, I mean it does seem, I mean the expectation was for roughly, in terms of the physical work done last year, I think it was about $5.5b under ARRA and the prediction for this year was $12b. It seems to us at the moment and we're not experts on this and we don't have the full picture countrywide, but it does seem to us that when the numbers are totted up finally for ARRA spending in 2010 it's going to be lower than that figure, but with a consequent tip over into '11 and '12. That's our first sense at the moment and it's hard obviously across the whole 50 states in the US to get a full picture on this, even from the industry associations, but that's our sense based on, as Albert has said, what we've seen through July and August.

If we don't have any more questions at the moment from the floor here, we might throw it open to the people listening in from outside Dublin. So I think we have a number of people who are lined up.

We have the first question coming from the phone lines from the line of Mike Betts. Please go ahead announcing your company name and location.

Yes, good morning, it's Mike Betts of Jefferies. I've got four questions if I could. The first two on the US Materials. July and August, maybe I've missed it, but did you give actual volume trends, what your volumes had done for the major products in those two months versus the same period last year?

My second question on US Materials, Vulcan were much more optimistic about their ability to recover that margin on the asphalt on the second half. I'm just kind of trying to, I wonder why, I mean I appreciate they're a much smaller business, are much smaller in that business but certainly their comments seem quite different. I guess my fundamental question there, Myles or Albert, is is most of that work now basically all booked for the year and it's just if it will come through? I mean there's very little new work to be won on that, so any kind of price increases there would more impact 2011 I guess, that's the question.

The third question is just could you update us on Holland? You talk in the statement about outlook, about economic indicators improving, are you actually seeing any improvement on the ground in Holland?

And then one for Maeve if I could. The depreciation charge was down a bit compared to a year ago; it seemed to be in the products division. Was that just currency, Maeve, or was there anything else going on? Thanks.

Okay, thanks, Mike. I suppose maybe if I deal with some of your questions on the material side. Vulcan, as you mentioned a specific company, referred to asphalt price increases in the second quarter which were of the order of 26%, that's the unit cost increases in liquid asphalt -- in their asphalt input. Our increases with the help of our winter-fill would have been significantly less than that.

I think given those levels of input cost increases and the price trends that Vulcan displays in the first half of the year where they would have seen their average price in asphalt decline 7% compared to our own delivery of a 1% increase, it just seems to me it's a very tall task to be able to turn that around in the second half of the year given the trends we're seeing. But, again, we're not familiar with their particular market areas.

In July and August I think we have seen the like-for-like volume trends show a slight improvement on what we would have seen in the second quarter of the year. But still on a heritage basis the volumes would still be lagging last year's level.

In relation to the Netherlands, Albert?

Yes, I think the overall comment on the Netherlands, really it's no change since the half year. The situation there continues to be difficult, there's uncertainty on the political side, obviously the government has yet to be formed and probably will be formed in the coming weeks or months. And then that's a bit question mark with regards to the allowability of interest on new home building or home purchasing and that's casting a bit of a pall or a bit of a shadow over housing.

But our RMI exposed businesses, our distribution businesses and our product businesses that are exposed to the RMI have proved quite resilient this year to be honest with you and I think we've seen the benefit of good cost take out in that business as well. So I think the overall backdrop is still soft but I think the actions we've taken during the course of last year and earlier this year have somewhat moderated the impact of that on the bottom line for our businesses there. And the RMI exposed businesses are the ones which I think will perform better in this year for us in Holland.

I think the other thing to comment on Holland, I mean Holland's economy is very closely linked with that of Germany. They're significant trading partners, a lot of German production and exports actually are channeled out through the Netherlands, so there's quite a linkage there. And I think what's encouraging is there's some much more positive indicators coming out of Germany over recent months. I think if they are maintained, and there is some question mark over that, because it does depends on export demand from overseas, but if that's maintained I think that is a positive for the Dutch economy as we move out into 2011. So I think that's something to watch in terms of the overall health of the economy and I think that's important for business confidence in the Netherlands, important as well for non-residential construction and infrastructure developments in the Netherlands.

So I hope, Mike, we've dealt with, sorry Maeve --

And I've got just a follow-up for you, Myles, if I could, just on the US, were there any weather issues in July and August? Because obviously May and June were bad partly because of weather, but there were no weather issues in July and August?

I think, again, we are a little bit careful about talking about weather because there has been so much of it if you like and it hasn't been favorable in the first half. Certainly, again in July, there were weather impacts across a number of states and the trend in August has been better than July.

Okay.

So taken together they're both modestly better than in the second quarter of the year. And the depreciation question for Maeve?

The overall depreciation charge is very slightly down last year, Mike. The translation impact is very small in the first half and there's a small amount of depreciation coming in from acquisitions, so it will be on the material side, and that's offset by a small decline largely reflecting the lower levels of CapEx.

Because in Europe Products, Maeve, it drops from EUR74m to EUR67m?

EUR68m to EUR63m?

Sorry, I'm looking at depreciation in amortization on page 18 and it shows it dropping from EUR74m to EUR67m.

I'm sorry, I was looking at pure depreciation, Mike. The amortization charges have come down a little bit because of the time with -- as you capitalize intangible assets and write them off over varying periods of four or five years or so, there is a fall off in amortization in Europe Products, yes, and in Products in America. So that decline is in amortization charges rather than pure depreciation.

Okay understood. Thank you.

Okay, thank you.

The next question from the phone lines?

The next questions come from the line of Laurie Mathers. Please go ahead announcing your company name and location.

Hi, guys, it's Laurie from Goldman's over in London. Three questions please. I just wanted to make sure, with the EBITDA guidance at EUR1.8b [last year] and a 10% decline, I just want to make sure that that is including the restructuring charges but is before asset disposals?

Yes, it's on the EBITDA number reported for last year post disposals.

Okay, perfect. Then the second was just in terms of the net debt for this year, obviously we've got quite a lot of movements in terms of information today, but I was just putting through some preliminary numbers and I was just wondering do you think there's a possibility that the net debt could increase this year?

Then the third one maybe if I put that in as well, if you could just talk a little bit more about the RMI activities in Europe. You're obviously saying that is something that has held up better and could do better next year. I was wondering if you could walk us through what trends you've seen in the first quarter and the second quarter? And then the next, excuse me, for the second half of next year, is your assumption that it will just be relatively better or do you think you could start to see some positive numbers in the RMI side over the next 12 months or so? Thank you.

On the RMI side, I think, particularly, and I'm not quite sure Laurie, whether your question was totally focused on Europe, but I think as we've seen in our Americas Distribution business in the first half of the year, we have seen an improvement there and that is predominantly probably two-thirds or so focused on repair, maintenance and improvement. So we have seen an improving trend there in US Distribution.

We have also seen in the first half of the year in the RMI elements of our Architectural Concrete Products business, a lot of which is paving and landscape products and concrete which go into refurbishing garden areas, patios, driveways, we have seen a better tone to that as well. So I suppose that's very much tied to consumer confidence, particularly on that decorative end.

The roofing and siding side of RMI is a more critical need if you like, if someone's got a leaking roof it's something they have to attend to and obviously harsh winter and some of the weather effects we've had in the first half of the year, which have been detrimental for our Materials business, have actually, I think, proved positive for our distribution business in the US. So I think there are some encouraging signs in the RMI activities there.

In RMI in Europe, Albert, maybe?

Yes, I think we've seen in particular our Distribution business which is exposed to RMI more than anything else, we've seen despite maybe a softening in the Netherlands, the Benelux performance of our DIY business and again in our Merchanting business relatively speaking the performance of the top line there has been less than other parts of the business which are more exposed to new build. Again, I think we see that it's the less discretionary spend or indeed it's the smaller euro item, so people have more of an opportunity to go out and spend that and we're seeing a better performance there. I think that's set to continue, it's only common sense.

And as Myles said, on the concrete products side over in Europe as well as the United States, again our landscaping business in particular there's been a fairly solid performance again being a more RMI exposed business than new build.

I think there's also focus, Laurie, perhaps in Europe on our Distribution, RMI business unduly on the Netherlands. I mean we also have significant businesses in Distribution in Europe and Switzerland and in Austria now as well, and in Germany, all of which have actually done well in the first half of the year and obviously they're tied in very much as well to general economic sentiment there which is more positive in those particular countries. So I think provided we see continuing positive numbers coming out of Germany, Switzerland, I think, has defied, it's an oasis of positive economic news and I think Austria is also doing well on the back of Germany. So I think there are some positive trends there on the RMI side in Europe that we can look to for 2011.

On the net debt side, Maeve?

We don't expect the net debt to increase for the full year, absent any major acquisition spend which we, of course, don't budget for. With the traditional seasonal working capital inflow in the second half of the year we would expect the year-end debt at the end of the this year to be lower than last year's year end.

Great. Okay, thank you, guys.

Okay, thanks, Laurie.

The next questions come from the line of Aynsley Lammin. Please go ahead announcing your company name and location.

Hi, morning, Aynsley Lammin from Citigroup in London. Just a couple of questions please. Firstly on acquisitions, if you could just give a feel, Myles, kind of how you're thinking about the balance between maybe protecting the balance sheet a bit more given the uncertain macro environment but then also on the other side you maybe need to drive earnings a bit more through acquisitions as the organic growth outlook's a bit weaker.

And second question, if you could say if there's any other businesses within the Group that you expect to be loss making for the full year, with the exception of MMI?

Then thirdly just on, if you could give us a feel for the kind of exposure at the Group level of sales to government spend in Europe and the outlook you see there for '11? Thanks.

Well, I think, Aynsley, just in relation to your question about protecting the balance sheet, CRH has always been disciplined when it comes to acquisitions. That discipline applies in good times and in bad and I think we'll continue to be disciplined and rigorous in our evaluation of acquisitions and I don't think shareholders would expect anything else from us.

In terms of loss-making businesses, yes, MMI continues to be loss making and there are elements of some of the other divisions, particularly I suppose in some concrete operations where the results for the first half of the year would have been in negative territory, but we have taken significant restructuring measures in those particular areas to restore those.

With regard to exposure in infrastructure in Europe it is much less than in the US. I think overall if we look at our '09 business mix we're looking at an overall European picture whereby we're about 50% exposed to residential, 30% to non-res and about 20% to infrastructure. So in terms of your question, I suppose relates to concern at cutbacks in public spending budgets in Europe, our exposure in Europe for 20% to infrastructure would probably compare to a 50% exposure in North America, so it's much less on the European side.

Okay and then maybe just one last one, if you could comment on the Ukraine in terms of price and volume outlook you're seeing there?

Albert?

Yes, Ukraine, it's been a tough year for both volumes and prices for us this year. Ukraine has, there's well publicized government financing issues and the RMI are in there, so that's not a good backdrop for construction. So volumes have been off this year and prices have been off this year. In saying that, we're seeing the benefits starting to accrue through building a lot of stadiums for the 2012 Football Championships and we'd hope that it will support business next year. And with regard to next year, of course, we have the coming on stream of our new cement facility which we rebuilt a new dry facility down in Kamyanets-Podilsky and we should see significant benefits on the cost side of that coming through as that rolls out during the course of the next year.

Thanks very much.

The next questions come from the line of Ankur Agarwal. Please go ahead announcing your company name and location.

Good morning, Ankur Agarwal from Nomura. I have two questions. The first question is on Poland, if you can comment on the pricing trend that you have seen in Poland, and also the outlook for cement volumes in the second half of this year.

The second question is more strictly (inaudible) around the returns that you have generated, higher-than-average-industry returns that you've generated, in the last ten years, which clearly benefited from one of the biggest real estate booms in the US market. Now in the context of your geographical mix which is more tilted towards the US, do you see your returns in the next five years lagging the names with higher exposure to emerging markets? Or how do you see yourselves generating similar returns that you've generated in the last ten years, for example.

Thank you Ankur, a number of questions there. I think your question presupposes that companies with significant emerging market exposures are telling us what their returns are in those particular markets. I think you will dig very deeply into many annual reports before you'll find what the EBIT returns on investments are in those particular market areas. We believe that the returns there are -- offers good prospect for returns for the medium to long term but you can have short-term challenges. But, again, we have nothing to compare precisely, you may have some information, but we find it difficult to penetrate that.

We have earned very significant returns across the business and I think it has been a mark of CRH's performance relative to others in the industry. It has been obviously based on strong growth in the US. We are focusing our actions on returning to good returns in the US. The markets will recover in the US; they will not recover to the previous levels in areas such as housing and perhaps also have a better chance probably of getting back in area of non-residential, but again, some areas of non-residential will not recover to previous peak. And what we are doing is focusing on adjusting our cost base so that we will be able to return to previous return levels on lower volumes of activity in those particular markets.

You also I think asked a question about Poland and, Albert, maybe you might deal with that in terms of volume and pricing trends in the Polish market.

I think, again, you've got to look at the context of Poland. We had a very difficult first quarter, Q2 and a very long and prolonged winter and a very difficult cold winter. But we've seen in quarter two and again in quarter three, in July and August, some good volume trends coming forward, so volumes are ahead in all our products in Poland versus last year.

Pricing has been weaker, the weakness in non-cement products was there last year, that is, it is changing somewhat and, again, pricing will only recover when volumes start. Volumes have to come back before pricing comes back so you've got to see the volumes come before the pricing comes. Volumes are getting better and we're seeing a small up-tick in non-cement product pricing. Cement pricing this year has been more difficult, it's a European trend, it's not just a Polish trend and last year prices had come off but, again, that's against the back of three or four years of very high price increases, but that's the environment we're in at the moment. As I've already said it's got a high single-digit (inaudible) the pricing in Poland this year in terms of a decline, but volume should be ahead for the full year.

Okay, thanks a lot.

Our next questions come from the line of Mark Hake. Please go ahead announcing your company name and location.

Good morning, everyone, it's Mark Hake from Bank of America in London. I've got three questions actually. Firstly, Myles, you touched on asset disposals, I just wondered whether we should read into that that maybe you're actually looking to sell a little more in the next couple of years than you've historically done.

Secondly, could you just remind me on the debt and the banking side of things your covenants if you could, if you've disclosed that in the past?

And the finally, just to clarify, I think it was Albert's comments on the outlook for 2011 for the US, did you imply that you expected industry volumes for aggregates to be flat next year?

Okay, thanks, Mark. On the disposals side, yes, well, I suppose two points on that. We have stepped up, in the light of the emerging demand levels that we're seeing, we have stepped up the ongoing disposal of surplus assets and underutilized equipment right across the Group because, again, I think this is probably going to be a slower than expected pickup in some particular areas.

Also we have announced that we have some particular areas of the portfolio which we are selling and I think we continue to review our portfolio of businesses and I think looking out over the next couple of years it's quite possible there may be some further disposals arising out of that as well.

On the banking side, Maeve, I think our primary covenant --

Our main covenant would be debt to EBITDA, or EBITDA to net interest cover and the bank covenant figure is 3.5 times. So at 6.5 for the half year we're very comfortable relative to that.

Perfect, okay. And then on the US aggregates?

On the US aggregates side of things I think we would expect some pickup on the private side in 2011. The visibility, Albert, on the public side at the moment?

I think the visibility, it's difficult to say. It comes against the backdrop of again seeing volumes across all our products down between 25% and 50% of the highs where they were three, four years ago. The question is how much more can it fall. Understanding, of course, that state budgets are stretched, but again the ARRA funding is there next year, officially it's less than this year but we're seeing a push forward from 2010 into 2011 in terms of ARRA spending, so we think that we're seeing projects being pushed. So against that backdrop I think we could look at a situation where it could be broadly stable with this year, but it's very unclear.

Okay. Thank you very much.

Our next questions come from the line of Darren Hook. Please go ahead announcing your company name and location.

Hi, good morning, this is Darren Hook from Barclays Capital in London. Just a few questions if I may. I'm interested with regard to your comments on the pullback in state and municipally funded projects. Could you elaborate a little bit about, are these cancelled, these projects? And how much of a risk do they pose working into 2011? And maybe in that context if you could give us a feel for, you made the comment that 50% of your US activity is infrastructure related, how much of that expenditure would be related to state and municipality funded projects for example? And also, that comment, does it in any way reflect more on your geographical exposure compared to your peer group.

Moving on to your acquisition policy, obviously there seems to be a balance there between the comments you make, you can spend EUR1.5b in 12 to 18 months versus keeping a prudent approach. Given the reality of the market backdrop would it be unexpected for you to do a large acquisition, to spend EUR0.5b or more within three to six months? Or is that possible?

Also on the net debt comment, could you just clarify that you did say that by the end of this year you'd expect your net debt figure to be below that of at the end of last year.

And finally, if you could just make a comment with regards to the outlook for the full year, whether you see your credit metric still being in line with the requirements of your present rating or do you see some pressure developing on your high BBB rating. That's all from me. Thank you.

Okay, a number of questions there. I suppose just in relation to highways spending, the very broad metrics are in a normal year approximately $80b is spend on highways in the US and about half of that comes from the Federal Government, about half comes from the state. In the current year there is probably, there is projected to be an additional $12b or so on top of that coming from the stimulus funds which were passed and approved early last year, so bringing the figure up over $90b, of which broadly $50b will be coming from Federal Government and from the stimulus package and the other $40b coming from state and town spending.

I think what we are seeing very much through July and August is, first of all, some slippage in that stimulus spending which we believe will probably believe to the '10 figure spend being somewhat lower. But also, I suppose, more significantly that $40b which comes from the state and from townships and which isn't required to be matched and there's an element of that which goes to match Federal funding, but that's probably of the order of maybe $10b, there's $30b which is really spent on the hoof by states and municipal townships and we're seeing that really they are not spending on that expected level in the current year. I hope that answers that particular question.

Thanks, that's helpful, yes.

On the acquisition side, certainly I mean you could see spending, as mentioned, our capacity to spend EUR1.5b looking out over a 12 to 18 month period, you could certainly see if the right level of opportunities came along or if the single individual opportunity came along perhaps at the right valuation and with the right combination of potential benefits for CRH, you could see a EUR0.5b spend within a relatively short period of time. I think we have the capacity to do that and stay within our credit metrics and within our current rating band.

If I can pick up on the net debt, yes, I did say that we think absent any major spend on acquisitions for the rest of the year and given the spend we've had year to date on that, with the significant working capital inflow in the second half of the year, we think the year-end debt will be less than last year.

With regard to our credit metrics and ratings, we can't really prejudge what the rating agencies would do but I think on the basis of the current forecasts that we have we don't think that would, we think we'll be still comfortable in our current rating.

Fantastic, thanks.

I think we have two more questions on the phone lines to take and I think we're running out of time, so maybe we'll quickly move to those.

Our next questions come from the line of Arnaud Palliez. Please go ahead announcing your company name and location.

Yes, hello, Arnaud Palliez from CA Cheuvreux. I have one question about the construction business in the US. I would like to know if this business was loss making in H1 or, you mentioned the fact that the markets are lower than for materials, I just would like to know what is the kind of difference?

In terms of the business, our construction business is traditionally loss making in the first half of the year because we do a lot of maintenance and repair or our construction equipment in the first half of the year. And also there's very little activity going on for the first three to four months of the year in our construction business in the Northern tier states in the US because of the weather conditions. So that's not an unusual occurrence for us. The bulk of the construction activity takes place in the second half of the year and obviously we would expect that that business would be profitable for the year as a whole. It's a very seasonal business, as indeed is our overall Americas Materials business.

Okay. Is it one of the businesses where you intend to make some asset disposals?

Yes, I think with the lower levels of activity that we're seeing, obviously there's a significant equipment base in the particular business. We have been efficient in managing that equipment base over the long term but with the lower level of activity that we're seeing we do have more surplus equipment to dispose of in the second half of this particular year.

Okay. Thank you very much.

Our next questions come from the line of Harry Goad. Please go ahead announcing your company name and location.

Yes, hi, it's Harry Goad from Credit Suisse in London. Just, you mentioned the outlook statement on a sort of more positive tone and economic indicators in Europe looking more encouraging. Can you just flesh that out a little bit and highlight where you've seen an inflection points in the last few months?

Well, I suppose we've moved from a position, particularly in May and June, where we had a lot of concern about fiscal deficits in Europe and concerns about the euro to a much more positive backdrop in relation to Europe generally through July and August which is encouraging. Hopefully that will be maintained. I think we've seen, particularly in relation to Germany, some strong figures coming out which, as I mentioned earlier, do augur well for the German economy and for related economies which are very much interlinked with Germany, particularly the Netherlands which I mentioned, also Austria. And we have significant operations across that particular territory, I think, which is encouraging. Hopefully we'll see that maintained as we move through the second half of this year.

I hope that answers that particular question.

That's great. Thank you.

Okay. I'd like to now quickly move, we have some questions here which came in over the web. I think a lot of them have been dealt with in the course of responding to questions from the floor here in Dublin and from questions on the air, but there are a number.

I suppose one question is how many tons of bitumen will you buy in 2010? I think overall between our winter-fill program and the ongoing spot purchases which we conduct through the season, we're probably looking for total bitumen purchases which will probably come in probably just someway a little short of maybe the 2m tonnes for the year as a whole. That would be our expectation.

CapEx guidance for the full year is another question. Maeve, you might like to deal with that?

Well, the CapEx for the first half of the year was around -- was EUR219m. We expect it to be probably at least EUR450m for the second half of the year, so somewhere between EUR450m and EUR500m probably.

A question asked was in relation to the split of US turnover in 2009, between construction and between the products end of the business. I think the total US dollar turnover in US Materials in 2009 was just $6b, about 40% of that, $2.4b, was actually construction related, the balance being sales of products in aggregates, asphalt and in ready-mix concrete.

Some other questions, I think we've dealt with comments on pricing trends in Poland, we've dealt with that.

Somebody asked the question is relation to order books reported by construction companies. I think there's an important distinction to be made between CRH and construction companies generally. When we talk about construction we're referring to highway paving in the main and these are jobs which are completed within the calendar year in the main. A certain element do flow over into the following year but these are generally projects which have a 12-month duration at max so when we talk about construction activities I think it's construction paving of highways. We are not involved in new highway construction or indeed to any extent in bridge construction.

So I think just a distinction there between what we regard as construction which is i.e. paving, and the pure construction companies who get involved in more fundamental structural businesses. So our order books would not necessarily reflect the patterns that they are seeing where they may have order books which go out for anywhere between two and five years. I think just an important distinction arising from some of the questions that have come in over the net.

So I think if there aren't any more questions, there don't seem to be anymore here from the floor or on the wire, we'll leave it at that. We are available for anybody to follow up with questions for the remainder of the day and people should make contact with us through the Investor Relation Department at the CRH Headquarters in Belgard Castle. If you email we can certainly make every effort to get back to you in the course of the day.

So I'd like to think everybody for attending here in Dublin, for listening on the webcast and thank you for your attention this morning.

Ladies and gentlemen, thank you for your participation. This concludes today's conference. You may now disconnect your lines, thank you.