CRH PLC (CRH) 2010 Q4 法說會逐字稿

Good morning, everybody.

You're very welcome here this morning to this presentation of our results for 2010.

I'm joined here this morning by my colleague, Maeve Carton, our Finance Director; Albert Manifold, Chief Operating Officer; Mark Towe, who heads up our operations in the Americas; Henry Morris, who's responsible for our Europe Materials operations and for the division's activities in Asia; and Erik Bax, who's responsible for Products & Distribution activities in Europe.

Before we get into the question and answer session, we have a presentation, and I'll be assisted in the presentation by Maeve and Albert.

So just to kick off with the key points from our results for 2010; you've seen the announcement this morning.

Good delivery, we believe, in the challenging year.

A moderating pace of decline in top line as the year progressed.

Outturn very much in line with our guidance from last November.

We saw a step up in development activity with a EUR0.6 billion spend for the year; EUR0.4 billion of that actually being spent in the second half of the year.

Once again, you're seeing robust cash generation from CRH, with an operating cash inflow of just under EUR700 million, after dividends of approximately EUR400 million for the year.

And with that robust cash flow, year-end debt actually coming in just under EUR3.5 billion, a decline for the year in net debt of about EUR250 million, despite spending EUR1 billion on capital expenditure and acquisitions.

And the full-year dividend unchanged at EUR0.625, based on the strength of our cash flow and the strength of the balance sheet.

I mentioned that the pace of decline moderated as the year progressed.

You can see that very clearly here on the top of the slide.

Like-for-like sales, excluding acquisitions and translation effects were down 10% in the first half of the year, but we saw moderation through the second half.

And fourth quarter like for like down about 2%, and overall, underlying sales for the year down about 7%.

And you can see that reflected as well in the EBITDA progression compared with prior year as we moved through 2010.

I mentioned also a moment ago the outcome being very much in line with guidance.

You can see that very clearly on this particular slide.

We guided in early November to an EBITDA outturn of about EUR1.6 billion; came in slightly ahead of that.

Impairment charges were slightly higher than we had indicated; the EUR124 million outcome comparing with EUR100 million in our guidance.

And overall, looking at things at the profit before tax level, you can see that on a pre-impairment basis, we were actually slightly in excess of our guidance range of EUR620 million to EUR650 million, with an outturn of EUR658 million.

With the slightly higher impairment charge on a post-impairment basis, the EUR534 million outcome was smack in the middle of the EUR520 million to EUR550 million range.

So outcome, as I mentioned, very much in line with guidance.

There are some of the headline numbers for the year; maybe taking a quick look at performance across each of the business segments, the Materials, Products and Distribution in Europe and in the United States.

You can see here Europe Materials.

Delivery more or less in line with last year.

Significant cost reduction measures there, and benefits from increased trading in CO2 emissions; helped to broadly compensate for its tough underlying pricing across many of our markets.

People tend to focus on our exposure to Ireland, obviously; and also to the Iberian economies.

But as you can see from the pie chart there and the split of EBITDA for Europe Materials for the year, you can see that it's very well balanced.

About 40% of EBITDA coming from developing countries to the East; about 40% coming from stable economies, Switzerland, Finland, Netherlands; and then just 20% last year coming from what you might loosely term austerity economies.

Looking at the operational delivery in 2010, you can see here the scale; in the top half of the slide, the scale of those operations and some of the volume changes that we experienced during the year; some positive; also some negative.

Pricing generally competitive in all regions, but input costs in 2010 relatively stable.

On the operational side, I'd say the highlights for 2010 were on the procurement side.

Continuing progress in terms of developing and reducing our clinker factor; and also very much on the energy front, good progress in 2010 in upscaling our use of alternative fuels, with further progress expected as a result of investment in 2011.

And that looks like being more important, obviously, in 2011 with what we're currently seeing in oil markets worldwide.

Looking at the Product side in Europe, I would say here a solid performance for our businesses, with the exception of concrete.

You can see here the key numbers.

EBITDA margin down about 2.5%; a more significant decline at the operating profit margin, because we had significant impairment charges here in this business which impact at operating profit level.

EUR54 million in 2010 compared to EUR19 million in 2009.

Looking at the results; as I mentioned, concrete very difficult, particularly the heavy structural concrete products.

The architectural side of the business much more resilient.

Our light-side building products performed better than in 2009; and in clay, we also showed an improvement overall in profitability, helped by Ibstock here in the UK.

Looking at the highlights; I think one of the highlights of the year for Products was the significant portfolio adjustments that we moved on during the course of the year; agreeing the sale of our Insulation business in Europe.

Some of that has been completed already in the first couple of months of the year.

The remainder will be completed before the end of the first quarter.

We exited our Italian concrete products business, and we're also embarked currently on the disposal of our Daylight & Ventilation operation.

So we're making portfolio adjustments to our Product businesses in Europe and focusing on core growth platforms across the developed markets in Europe.

A much better picture in our Distribution activities, obviously helped here very much by the exposure to repair, maintenance and improvement.

And you can see there, ongoing margin delivery.

Builders merchants obviously continuing to account for the bulk of EBITDA in this business, but we are growing our segment in SHAP, which is the Sanitary Heating & Plumbing area of operations in this particular business in Europe.

On the operational side, tough first half; better in the second half of the year.

Builders merchanting; strong performances in Austria, in Switzerland and in Germany; and our DIY business was resilient in the tough market in the Benelux with obviously weaker consumer spending.

Significant delivery here from our operational excellence programs.

That's evident I think in the margins that we've shown for our Distribution business in 2010; and also, a major development step in the course of the year with the step-up to 98% ownership in Bauking in Germany, which extends our position in Germany in Distribution, and obviously gives us a very good platform now for further development activity in Germany.

And also, we expanded our SHAP business as well with an acquisition in Belgium.

So that will cover the key highlights for the year for the European side of our business.

Moving on to the Americas.

In midyear, with our results at the interim stage at the end of August, we had to adjust our guidance for the Materials operations in the US based on the volume trends that we'd seen in July and August which were weaker than we expected.

And at that stage at end August, we guided towards a 20% EBITDA decline in dollar terms for US Materials for 2010.

The 16% decline you see there at EBITDA level in euro terms, is helped by some exchange translation benefits.

The underlying dollar figures are down 20%, which is again in line with what we guided towards at the end of August.

And in terms of the revenue splits here, you can see very much continues two-thirds in aggregates, asphalt and concrete products, and about a third of revenues in the paving market.

Looking at the operational delivery in 2010.

The headline numbers for US infrastructure spend for 2010 show as being up 2%, but that encompasses spending on rail infrastructure, metro, ports and airports.

The highway component within that was down 5% in 2010.

And you can see that mirrored there in the volume trends in our Aggs and in our Asphalt, and highway is a big element of activity for this particular business.

You can see there also that unlike many in the sector, our focus on commercial delivery enabled us to move pricing ahead in Aggs and in Asphalt for the year.

In Aggs, that was sufficient with our other operational excellence, to leave us with flat EBITDA for the year, but obviously significant decline because of input costs which were unrecovered in Asphalt in 2010; and also a significant decline in terms of EBITDA in Paving.

Again, all of these trends were flagged at the end of August.

Key elements here I think in delivery for 2010 were the focus on commercial aspects of the business and the ability to show price improvement for Aggs and for Asphalt, I think which compares very well with others in the sector.

And I think a key also is the step-up in the second half of the year in our development spend was very much focused on our Materials business in the US, where we saw many bolt-ons coming through in the second half of the year.

Many of these were deals that we had been working on for a good number of years and had reinitiated in the later part of '09 and in the early part of '10; and they substantially strengthened our Aggregates reserves across the US.

And in the first two months of this year, we've already completed some further deals in our Aggregates business, so we're seeing a good flow of opportunities coming through on the heavy end in Materials.

On the Products side in the US, varied outcomes here.

You can see the EBITDA margin down slightly, the operating margin impacted by an impairment charge of about EUR40 million primarily related to the disposal of Ivy Steel.

And again, you can see here, that's the bulk of our EBITDA, and this business is generated in our Building Products segment.

I'll just say a bit more about that in a moment.

The Building Products segment, that encompasses now the architectural products group, the Precast group.

APG was flat.

We saw good growth in its activities in Canada, and also some solid demand in terms of its exposure to the big home centers.

Precast was down in MMI; Ivy was impaired, obviously, which impacted on the results.

Our glass business, BuildingEnvelope, tough business last year because of so much tied into non-residential activity.

Key aspects I think in terms of operational delivery here for 2010 was the organizational realignment across our Product businesses in the US, which have seen our architectural products, our Precast and the remaining elements of MMI now consolidated into one building product unit.

And that gives us significant overhead saving costs.

It also enables us to leverage more effectively the synergies between these businesses, in terms of our approach to market, in terms of cost base.

And a lot of that was facilitated, obviously, by the slimming of the MMI portfolio with the sale of Ivy Steel.

Finally, on the segmental side, looking to Distribution in the Americas.

Again, a similar pattern to our Distribution business in Europe, benefiting particularly from residential RMI activity, repair, maintenance, improvement, which our exterior products element of this business particularly taps into.

And a good margin improvement in this business in 2010.

So on the exterior products side as well, we saw sales up, margins improve.

The interior side's more commercial and new-build oriented; had a tougher sales backdrop, but with the benefits of a lot of the operational excellence programs that we've had in place in this business, they were able to hold profits flat.

Highlights here for the year; refocusing our Interior Products business, which has primarily had a commercial bias, more towards the res market to try and capture some more of the residential activity, particularly in the RMI.

And with our rationalization across this business now largely complete, we've closed quite a number of branches over the last three years.

We're focusing very much on operational excellence, customer initiatives, and also pricing; and being more effective in pricing across this particular business.

So I think one of the pictures that you see coming out of those six segments is really the resilience and the resurgence on the Distribution side, both in the Americas, and also in Europe.

So just to wrap up these opening slides, we believe that the actions we've taken and the delivery we've shown in 2010, on a number of fronts, sets a very solid base for facing into 2011.

I think you've seen, hopefully from these slides, continued delivery on operational excellence.

You've seen, from our delivery, particularly in pricing in US Materials, a sustained focus on pricing and recovering higher input costs.

On the portfolio, you've seen significant adjustments in the course of the year, particularly in our Europe Products segment, but also in our Products segment in the Americas.

And we continue to look for opportunities on that front.

Development.

Step up in development activity in the second half of the year and an increased pipeline of opportunities as we move into 2011.

And we'd be hopeful of completing deals but, again, only where we see value in the course of the year and where we see businesses that make sense for CRH.

On the cost side we're continuing to optimize our cost base.

We've a lot of work done.

We continue to trim where we can.

Albert will say some more about that in a few moments.

And finally, I think, on the cash flow you've seen again very robust cash generation across CRH in 2010.

And I'd now like to hand over the Maeve just to flesh out that delivery on the cost side a little more for you this morning.

Thank you, Myles.

Before I get on to my very favorite topic of cash generation I'm going to just summarize quickly the key numbers for the Group as a whole of -- Myles has gone through the detailed segment performance for each of the individual segments for the Group, so what I'm just going to summarize here is how that translates into the numbers for the Group as a whole.

One of the early slides you saw from Myles was the slide showing the moderation in the rate of decline of ongoing sales, which resulted for the Group, for the year as a whole, of a decline of 7% in ongoing sales.

In the reported sales number we had the benefit on top of that of good foreign exchange translation with the stronger dollar and also stronger zloty and Swiss franc, which gave us a boost, and also the incremental impact from acquisitions in the latter half of 2009 and during 2010.

So with those two benefits, the overall reported sales number is down only 1%.

At EBITDA level, the EUR1.6 million outturn for the year, very much in line with our guidance, as Myles said earlier, and that reflects a 1% reduction in the EBITDA margin for the year.

Depreciation and amortization charges were up somewhat by EUR70 million between 2009 and 2010, largely as a result of the impairment costs, which Myles spoke about, in our two products segments.

And, as a result of that, in spite of the 10% decline in EBITDA, our operating profit is down about 27% in 2010.

And what that reflects -- that results in at the earnings level is a 31% reduction in earnings down to EUR0.613 per share.

And, as you can see with the recommended maintained dividend for 2010 our earnings at EUR0.613 more or less cover that dividend.

Now, my favorite topic of cash generation.

Firstly the working capital.

One of the -- the controlled working capital has always been a very important focus for CRH and during -- what this slide here shows on the green line is the trend in sales over the period 2004 to 2010.

And the blue line expresses working capital at the year end as a proportion of those sales.

Just one way of looking at the management of working capital.

And what you can see is during the period 2005 steadily to 2007, that trend was improving.

The trade working capital as a proportion of sales was gradually reducing.

As sales started to decline in 2008, that decline happened a little bit too quickly for us to react and we saw a spike in that number in 2008.

But as soon as we started to kick in action again, the trend has been improving consistently since then and is now at around 11%.

So very strong delivery on working capital during a period of particular difficulty.

The other area we focus on very carefully for cash generation is restraint on working capital -- restraint on capital expenditure, and what you can see here is that during the period, pre the downturn up to 2007, CRH continued to invest very heavily in its capital expenditure, particularly on our cement businesses where we did some major upgrades of our cement plants in Ireland, Poland and the Ukraine, some of that's still continuing.

As the underlying market conditions worsened from 2007 onwards, we were able to scale back very significantly on capital expenditure down to the current level, which is about 60% of depreciation.

And that reflects two strong characteristics for CRH.

Firstly, the very strong investment in the good years, which has laid a very strong foundation for the Group now.

And secondly, the characteristics of our capital expenditure, which is a large number of relatively small projects spread over our 3,600 locations.

And with those combined characteristics, have allowed us to scale back significantly as we needed to.

And what those two key factors have done is helped to create a scenario where we have an operating cash flow of just under EUR700 million for 2010 as a whole.

And the two key factors were the EUR256 million of inflows from working capital, and that's following a very significant working capital inflow from last year as well -- and from the previous year as well, and also significant restraint on working capital where we've seen capital expenditure going from EUR1 billion in 2008 down to less than EUR0.5 billion in 2010.

For the overall impact on net debt, then, in spite of the spending on capital expenditure of just under EUR0.5 billion and EUR0.5 billion on acquisitions in 2010, so a total expenditure of over EUR1 billion, we've managed to reduce our net debt by EUR250 million to just under EUR3.5 billion at the end of 2010.

And that's after a negative translation impact that strong US dollar has had a negative impact on our net debt of EUR220 million.

The other side of that strong dollar is, of course, a boost on our equity, which had a benefit of about EUR0.5 billion.

And so at the end of 2010 our net debt to equity number has reduced to 33% compared to 38% at the end of last year -- at the end of 2009.

Now, the other aspect of focusing on cash generation and cash management, is strong and prudent management of our balance sheet and access to global markets.

And during 2010 CRH was able to raise $750 million on the public markets in the US.

$400 million of that was in 10-year debt and the remainder was in 5-year notes.

CRH used that money to repay some of our more shorter dated bonds and the real impact of that was the effect on our maturity profile, which we've shown here for the next five years from 2010.

The maturity profile shows no undue bunching of maturity, so the repayment schedule of that debt is something that's very manageable for the Group as a whole and puts us in a very strong financial position.

So to summarize, the key factors for CRH, in terms of the financial numbers, are our very strong cash flow and our ability to continue to generate strong cash flow, even in the current very difficult conditions that we've been experiencing in the last few years; a very strong and manageable maturity profile for our gross debt; our ability to access global capital markets when we need to; our commitment to our investment grade rating, which we've reiterated during 2010 and we continue to remain committed to; and significant development capacity.

Our net debt of EUR3.5 billion at the end of 2010 is made up of gross debt of EUR5.3 billion and cash and liquid investments of EUR1.8 billion.

On top of that we've a further EUR1.3 billion of undrawn committed facilities, giving us available liquidity of over EUR3 billion at the end of 2010.

Our credit metrics that are reflected in those numbers are a net debt to EBITDA of just over 2 times and our EBITDA to net debt of 6.5 times; very much well within the limits that are required under our covenants.

So we're in a very strong position financially and well positioned to face into the future over the next couple of years.

And now I'll hand over to Albert who's going to look after the operational position.

Thank you, Maeve and good morning.

We're here this morning to talk about the 2010 results and fundamental to the delivery of those 2010 results has been our operational excellence programs that have been delivering for the last number of years.

So I want to spend a few moments just going through exactly what our excellence programs have done for us in 2010, and indeed in previous years, and to do that I want to set that against a backdrop of the environments that we all know we've been going through in the last four years.

And from a CRH perspective, we can see the impact of what has been happening in global construction markets from 2007 to 2010.

We have seen our revenues decline over that period by more than EUR6.5 billion, around 30% has gone off our top line.

We've seen it in our most effective markets, we've seen volumes down from 20% to, in the worst case, over 70%.

At the same time, of course, with those volume declines, capacity has remained in the marketplace and that has put pressure on pricing.

And with that pressure on pricing, that's been compounded by the fact that we've had to deal with very significant input cost inflation, in particular in 2008, on the back of rising oil prices.

And then from a CRH perspective, we have a very large business, a broad footprint of geographies in business, and of course it has happened sequentially.

Some parts of our businesses have gone down before others.

So we've had a range of sucker punches that have come at us over these four years.

But as always within CRH we've had -- we've been scanning the horizon.

We have always been proactive in looking at how we can manage our businesses going forward and we took early decisive action, in terms of looking at this downturn and seeing how we could manage through it.

Now, so what did we do?

And this slide will be familiar to most of you because we've produced it three or four times and we've updated it again for these results presentations.

When we last showed this in the second half of last year, we had targeted cost savings for the 5-year period of about EUR1.8 billion.

Well, during last year, we did better.

We actually drove more costs out of our business, not by taking heads out, but actually becoming more efficient and more effective at what we did.

We've cut our costs in terms of how we produce our primary products.

We've lowered our input costs.

We've become more efficient at how we produce our products and how we sell our products.

And on top of that, in the most challenging environments, we've improved on our commercial excellence programs as well.

So the changes you're seeing there, that EUR200 million uplift to EUR2 billion, come through with better delivery in efficiencies in 2010, to the tune of about EUR140 million and we've targeted a further EUR60 million of costs in 2011 to increase the total savings for about EUR2 billion.

These are very significant numbers and what I want to do is to show exactly how these numbers impact on our cost base, impact upon our results and I want to focus on three years, the three core years of this; 2008, 2009 and 2010.

And the growth savings that we have achieved during this period of time totaled EUR1.8 billion.

And I want to take you through how they flow through to the results that we are presenting here today.

So I'm going back to the start point which was the end of 2007, those happy days when we produced EUR2.1 billion of EBIT.

But then something bad happened.

And something bad happened was we had this tremendous unprecedented decline in volumes.

Now, that volume decline you're seeing there is the impact purely of the lack of volume going through our operations.

There's no price impact, no cost impact, pure volume.

The market decline cost us EUR2.7 billion in lost profitability.

And on top of that, and a further challenge, the cost inflation we saw in 2008 was a further EUR1 billion of extra costs we had to use.

So what did we do?

Well, I think we responded well to the challenges and the response, as we called it, was both operationally, in terms of our operational excellence programs and our commercial excellence programs.

Now the EUR1.8 billion I showed you ringed in the previous slide, you can see it coming through there in cost savings, of which more than 40% are now permanent in nature.

So we clawed back on cost savings EUR1.8 billion of our profitability.

And on top of that, in the most challenging time we've seen in terms of volume declines and overcapacity in most of our markets, through our commercial excellence programs, we managed to claw back a further EUR500 million of profitability, in terms of price recovery against the -- in the face of significant cost inflation.

And that delivers and shows you how important, how crucially important, to the delivery of the results this morning, has been the internal work we've done in our business, both in an operational sense and a commercial sense.

And I think it shows that, in probably the most challenging time we've seen in our industry for decades, not only did we manage our businesses and manage them well, we also took on the extra task of reorganizing our businesses, restructuring our businesses and repositioning our businesses, taking the tough decisions in these challenging times to deliver what I still think are excellent results.

I just want to break those results down between Europe and the United States because it's similar but a slightly different story.

In Europe, again, you can see the impact coming through there, the volume impact, EUR1.3 billion of our profitability in Europe was lost purely by virtue of the fact that volumes weren't coming through the door.

Our guys in Europe rolled up their sleeves and they got stuck into the business and they took out, as you can see there, EUR900 million of costs and recovered that back through our businesses.

Particularly our energy intensive businesses were faced with a big challenge in terms of the energy costs coming through, higher energy costs coming through in 2008 in particular, and we struggled to pass that on in some businesses.

Our distribution businesses actually did very well.

They recovered a lot of the higher costs and passed it back on.

However, our Products and Materials businesses, principally due to the overcapacities we have in the industry and also due to the fact that the rate of the decline was very severe in some of our major markets, struggled to pass through those price increases -- those cost increases, in terms of price recovery.

Looking at the United States, again similar but a little bit different.

Again, you can see a very significant impact of the volume declines, EUR1.4 billion.

On the savings, you can see a higher proportion of the permanent cost takeout here in the United States and that's really to do with the structural nature of taking costs out of the United States.

It's a little bit easier to get at permanent costs in the US than it is in maybe perhaps more structured or restricted European markets, it's just the nature of the countries we are in.

And the cost inflation, very significant cost inflation here, driven across some of our major input costs, but a super performance in terms of commercial excellence.

A really determined effort to manage our markets well, and as Myles referred to it earlier on, as you look to the price [of across] -- of our main products in our Aggregates and Asphalts, you can see exactly, we focused very much on a commercial excellence.

You can see it in the numbers and you can see how important it was to us here.

We managed to claw back almost all of the input cost inflation over that period by good solid commercial delivery.

I think it shows how important operational excellence has been to the delivery of these results.

I think this shows that, as always, CRH has been very proactive and very determined to manage the businesses, in good times and in bad.

We have made some structural long-term changes to our businesses, more than 40% of the cost savings and the cost efficiencies we have in our business are now permanent in nature.

And we believe that, as we look at our operations now, we are better balanced in terms of capacity and in terms of our position, in line with market demands than we have been at any time over the past three or four years, and significantly.

We believe we are operationally well positioned to benefit from the upside leverage as markets recover.

So I'm just going to pass you back to Myles who's going to take you through our perspective on the markets for the remainder of the year.

Thanks, Albert.

I think you've got a good sense there from Maeve as a few slides as to how well positioned we are financially as we head into the main operating season in 2011 and again from Albert on just how we are positioned after a lot of tough operational action taken over the last three to four years.

I know everybody's probably keen to move on to Q&A, so I'd just like to wrap up very quickly with a few brief slides on outlook.

As I mentioned at the start of the presentation, we have seen through the remaining -- the final months of last year, moderation in the rate of like-for-like revenue decline across our business.

And year to date in 2011, our revenues are showing good improvement on 2010 levels.

And underlying demand overall would appear to have stabilized over the last three months.

I think the early 2011 comparatives, we just have to treat them with a little note of caution because they are, to an extent, flattered by comparison with the severe spring weather that we had in January, February and March of last year.

But we have seen much more positive trends through January and February.

So when we look to the year as a whole, and assuming no major market dislocations across the world, we believe it's reasonable to expect decent like-for-like revenue growth.

Price progress is obviously going to be key to revenue growth and to the recovery of higher input costs.

The acquisitions which we have completed in the second half of last year and thus far in 2011, will add to our performance in 2011.

We have the capacity, as outlined by Maeve, to capitalize on a growing acquisition pipeline where we see value.

And overall, we look to a year of progress in 2011 and to stronger upward momentum thereafter as markets recover.

So with that, I'm happy to throw things open to questions and answer.

I think we'll have questions from three sources; from here, from the floor first of all, and then I think we have the ability for people listening on -- live to ask some questions and also we'll have some web questions as well to deal with.

So happy now to throw things open to the floor.

(Operator instructions).

I have three quick questions.

The first one is regarding the like-for-like impact, and I think it was a minus 6.8% in 2010, would you be able to give us an idea on what sort of volume and pricing will you have at Group level?

That would be the first one.

The second one is, regarding cost inflation for 2011, would you be able to give us, again, an idea of the amount and to what extent that could be compensated by price, because you do mention it in the presentation but you're not specific about the magnitudes?

And then finally, if we're going to see an acceleration of investments, M&A, what is the emerging market strategy going forward, at least in the next 18 months.

Okay.

Well, I think maybe if I take the last question first, and I might ask Albert maybe to come in as well just assist me on that one.

I think the bulk of the investment during 2010 was in our Materials businesses in Europe and in the Americas, and we also saw a good investment in Distribution, here in Europe, but within that, and probably what was not particularly apparent to you, you will have seen ongoing contributions to our joint venture in China, as part of our 26% equity share of the projects that they were undertaking, which were largely debt-financed.

So there was significant development activity within our Chinese associate in the course of 2010, which is probably not as apparent from the numbers as you might appreciate.

And I think that is continuing in 2011, and I think we would expect for 2011, within our Chinese operations, to see a more significant development downstream from their cement base into concrete and into other construction products.

I don't know, Henry, whether you or Albert might like to just comment on what's happening in that particular business at the moment?

On the downstream there is opportunity to grow in readymixed concrete and concrete products, particularly larger precast products that are related to infrastructure and into aggregates.

And having completed an acquisition, as Myles said, in 2011 in Liaoning Province, they now have a good spread over the three north-eastern provinces, which is an area of 100 million people.

And they're well-placed, I think, to continue to expand and follow growing markets, but also to expand their market share.

I think, also, I think, looking at the broader picture from emerging markets, our footprint really is in three broad areas, which is in Eastern Europe, India, and China.

I think from a product perspective, I think really we're starting to fill out our product portfolio in China.

It's important to remember that when we got involved in China two years ago, the capacity of that business was 13 million tons of cement.

It's now over 20 million tons, and it's continuing on to grow this year, so it's really supporting the business from within.

At the same time, we're stepping out of the product footprint.

We've bought very significant aggregate reserves over the last 12 to 18 months, and I think that in some emerging markets, whilst the play has been for the last 10 years on cement, I think it's going to move into aggregate for the next 10 to 15 years, and I think we're very a significant aggregate player of the world.

It's something that we understand, it's something we do well.

And we think that presents a very significant opportunity for us.

In India, I think it may be more of a geographic expansion.

We have a position in Southern India in Andhra Pradesh.

I think we will, over time, add to that position, and we will look to step out into further parts of India.

And then, of course, as we push forward to being very successful, let's not forget 10 years ago, [Poland was] quote-unquote emerging market, now we've got Ukraine, we've pushed into Russia and this is on our doorstep.

I think we've a fundamental understanding of how to do business in Eastern Europe.

We have a strong base of operations and resources there, and I think we build up on that.

And, of course, as always in CRH, we're always looking to the next horizon, never satisfied with what we have, and there are still plenty of other opportunities for us, both in Southeast Asia, South America, and indeed in other parts of the world.

So we keep a progressive look at it, but always in time, and in keeping with the returns we feel we can generate.

Thanks, Henry; thanks Albert.

I think with regards to your question, Luis, in relation to the like-for-like sales decline of about 7% last year, and the split of that between volume and price, I think if you look at the data we've provided today, I think, as you'll see in our Materials business in the US, very modest price increases in Aggs and Asphalt, but well ahead of what the sector was achieving.

But overall, when you combine that with what we saw in paving and in readymixed, I think you'd have to say, probably, that overall pricing was down in our Materials business.

Also in our Materials business in Europe, I think pricing would have been softer last year when you take it right across the piece, in the heavy end of the business.

We would have seen some price progression in some selected areas in our products, and much better price progression, in terms of passing on rising input costs, in our distribution business.

But I think I would have to say, with regard to that 7%, probably it's combined overall with a slight negative on pricing, but it's predominantly a volume change in 2010.

With regard to input costs for 2011, we would have factored in rises in input costs already, across our heavier businesses, for 2011, and that would have been reflected in the pricing strategies that we would have been developing for 2011, and we'll be implementing and following through on those pricing strategies.

Obviously, we have to keep a very close eye at the moment on what's happening in energy markets.

A lot of our energy is hedged for 2011, and is already brought forward.

Particularly, I think it's fair to say, Henry, in our cement activities in Europe?

Yes, I think for the coming year, for our main coal and petcoke inputs, we'd be reasonably well covered at this point.

I think in our US Materials business, obviously we have the capacity, as you know, with one of our major input costs, to store significant volumes of liquid asphalt, and we have been buying through the winter season, and I think there, Mark, would like to say how we're positioned there?

Yes, we're in a good position this year.

We have [winter fuel] capacity to put more in there right now.

We're similar to where we were last year on the cost side in our tanks there.

So we're pretty comfortable that we can handle any of the energy issues that may arise here pretty soon.

Part of our -- on the liquid asphalt's one thing, the other piece would be the diesel.

You know historically we've been able to pass that price over there, and we feel comfortable to do that.

We've already put some surcharges in on that.

So we're watching that.

Obviously, that's a big piece of our business, and we've got a team looking at it every day, to take a look at that.

But we feel very comfortable on where we are, going in to the year.

But obviously on what develops in terms of oil markets over the next few months, and what further instability there might be, which would, I suppose, particularly impact on freight costs, as Mark has just said, and delivery costs, as it feeds through into diesel particularly.

I've got three, if I could.

Firstly, just maintaining with the fuel and energy cost, could you actually give me what the total euro energy and fuel cost was in 2010, and split it percentage-wise, between diesel, electricity, coal, and bitumen?

Secondly, the turnover in Paving and the $95 million delta in EBITDA, I presume that means you're in loss in that business?

And if so, how are you actually looking at the amount of Paving turnover you actually are going to contract for this year?

How is the competition there?

Because obviously that involves how much stone you pull through the business, but just how the non-res and housing contracts, who came into your market, how that market's looking?

And then thirdly, I wonder if you could just give me the 2010 turnover in Poland?

Okay, Mark.

Maybe just some comments on Paving first.

I think the key thing to remember, with regard to paving activities and the construction services we provide on highway work in the US, and I think we dealt with this in a good deal of detail at our Investor Day, was this is what creates the pull-through for our Aggregates and our Asphalt volumes in particular.

So it's a vital component of our business.

It has become much more competitive over the last two years, as work, particularly on the private side, has declined in the US.

It has forced more small contractors into public works.

But we would still have positive margins, albeit much skinnier than they were, in our construction business in the US.

I don't know, Mark, whether you'd like to add anything to that.

Yes, I think what we're seeing now, our backlogs are a little higher than we were last year, and the margins we expect not to erode any more in 2011.

I think with regard to energy costs, overall I think last year energy costs, including liquid asphalt, probably accounted for about 9.5% of revenues.

Maeve, I don't know whether you might provide a little more detail just on the split of that between asphalt and the other fuels, yes?

About half of that would be asphalt costs.

Fuel costs would be somewhere between 25% and 30% of the total.

Electricity maybe another 15%, and the balance would be the various other items.

And in terms of turnover in Poland, Henry?

I'll come back to you on that, Mark.

I think we've around about EUR500 million.

A few quick questions.

Firstly, you talked about acquisition opportunities in emerging markets.

I wonder if you can say a bit more about the opportunities there might be in developed markets?

And also, when you talk about ramp-up, what exactly we could be looking at here?

Obviously you've got a very strong balance sheet, it's going to be second-half focused, but are we looking towards a sort of billion level again, do you think?

Secondly, I also have a question on CO2.

I think you gained EUR67 million in 2010.

Do you have more credits to sell this year, and could you give us some idea of the sort of magnitude you could be looking at?

And then thirdly, could you say something about the outlook for US infrastructure, and in particular, whether you're a bit concerned about State-level spending, or whether you think that can offset any decline in stimulus spend this year?

Thank you.

Okay.

A number of questions there, Paul.

I suppose, on the development side, I think as we've shown last year, we've had a significant step up in our materials delivery in the US, and I think we continue to see a very good pipeline of opportunities coming through on that particular segment.

We've had some materials delivery also in Europe, in 2010, in Switzerland, [a very fine addition], Henry, to our business there in aggregates and concrete.

Yes, it's a business that concentrates on readymixed concrete and aggregates, located between Zurich and Lucerne, and we would have strong positions in both of those cities, so this fills in the gap nicely.

And we'll be working on some further materials opportunities as well, in Europe, for the current year.

Distribution, last year, Erik, we saw the take out of the bulk of the remaining stake in Bauking in Germany.

I think that gives us a very solid platform.

Maybe you might like to say something about how you see the horizon for building on that in Germany?

Yes.

The German market is very strong at the moment.

With Bauking we have a very strong position in the northern part of Germany.

We are not yet in the more southern part of Germany.

So we have a pipeline of contacts there, and we have the ambition to grow that to a much bigger business in Germany.

And I think we were hoping in the course of the year as well maybe to see some more activity on the product side, both in Europe and in the US, and also I suppose a distribution in the US would be a focus for us as well, particularly given the good pick-up and delivery that we've shown there.

In terms of acquisition capacity and for transactions, Maeve, maybe you'd like to say something about that?

Yes, as I mentioned earlier, we have significant liquid resources available to us.

Our capacity in terms of maintaining our investment-grade rating would continue to be in the order of EUR1.5 billion over the next 12 to 18 months or so.

And you had some further questions then, Paul, in relation to -CO2, yes?

Yes, CO2, maybe Henry, you might comment on that?

Yes.

Over the last couple of years, '09/'10, we've had an average of about EUR40 million per annum, and we would probably have the same.

It depends a little bit on prices, but we would probably have the same for '11 and '12?

And in terms of State-level activity, Mark, in the US in construction side?

Yes, we have to be careful.

It's so early in the season to figure out exactly what the States are going to do.

Our view at this point would be, it's going to be down a little bit more for this year.

We're just getting in through the information from the States now, and what receipts they have coming in, and so forth.

There's a report, you can read a different report a day, on what that means.

The [latest look] that was out yesterday from the Transportation Weekly was around 2% decline from the State overall, but it moves all over the place depending on the States, and it's regionally, and whatever.

So I would say it's probably going to be a little higher than that.

Our view, between the big States that we do business in, we've really focused on that, what the thing that offsets some of the declines are going to be, the maintenance focus on that, normally, when they're cutting back programs, they're not looking for new projects, or whatever, they're really maintaining the roads that they have in place.

So that plays into what we do well, so I think that will offset some of the State funding.

But it's kind of early to tell exactly how that's going to go.

I think just on that repair and maintenance thing, it has been a very severe period of weather, particularly in the eastern half of the US, over the last two to three months, at a time obviously when we're pretty well shut down in our materials activities.

But that does create the demand for a lot of rehabilitation work when things pick up in the spring.

So, we look hopefully to some further opportunities there in the course of 2011.

A couple of questions.

Can you give us some sense, Myles, in terms of the operating rates on the European cement business at the moment?

And I suppose I'm just trying to get some sense as to how sustainable its 59% -- CapEx depreciation of 59%, and at what stage are you going to have to start increasing that.

So maybe in terms of European cement, what sort of spare capacity is there and maybe also any plans around reactivating that Polish cement expansion plan that you had, that you shelved a couple of years ago?

The second question is on the product portfolio and obviously you've had some disposals there, any sort of further plans to review that whole product structure and could we expect to see further disposals in that as the year goes on?

And then finally a question for Maeve in terms of the tax rate, what kind of sustainable tax rate are we looking at Maeve, the performance was pretty good in 2010, what kind of rate are we looking for, do you think, for this year and next?

Thank you very much.

I think just in terms of capital expenditure, I think as Maeve pointed out in her slides, we were very well invested across our businesses going into this particular downturn.

We had made significant investments in cement modernization in Ireland, in Finland and in Switzerland and it's started in Poland, a project which obviously we put on ice in early 2008.

So I think -- and as we go forward we'll be watching carefully, Henry, as to the timing of when that project might need to restart, but you might say maybe a few comments on that.

We have still have some surplus capacity, we're increasing the usage of fillers in cement, reducing clinker ratio, so we're getting a bit more every year out of that capacity.

So we're comfortable enough for the moment, we're keeping it under review.

Obviously we're hoping that the market will pick up a bit more, I think during last year we saw sales reach about 5% above the previous year, but then the weather intervened in December so it ended up a little bit lower than that.

But there is good growth there and we're keeping that under review.

[Mark], the total revenue in Poland for the year was EUR533 million there.

So I think in terms of capital expenditure, last year a very good discipline on capital expenditure across the Group, a spend of about EUR466 million, I think we would be expecting to see the capital expenditure level move up a bit this year.

But no particularly significant projects within that, we're finishing the construction of our new cement plant in the Ukraine, which will bring very good efficiencies when that's up and running later in the current year.

But I think we continue at the moment until we get a better sense of the direction of markets to be keeping a pretty tight hold on the capital expenditure side.

Your other question related to tax, Maeve.

Yes the -- our expectation, it's very hard to give long-term ranges for tax because it will depend very much on the profile of our profitability in the different countries we're in.

But we would see the tax rate probably edging up a little bit in 2011, probably closer to 20%.

And obviously as profits increase in higher tax countries, the proportions, that will have an effect on the overall rate.

Products in terms of portfolio, I think we have made significant adjustments in the course of last year with obviously some deals still to be completed.

I think we continue to look at the portfolio, but we wouldn't be putting a flag on any particular component of that in the public forum just at the moment.

But again, right across the business side you'll just see continuing level of disposals, surplus plants, surplus property, also some fringe businesses here and there and we've exited some small niche distribution activities in the course of 2010 which we haven't said a whole lot about, they're quite small.

We'll continue to do that right across the portfolio where we see businesses that really don't have a future within the operating structure of the individual business unit.

Three questions please.

The first one could you be more specific on the energy that you answered in the first question.

So can you say how much of your energy for 2011 is currently hedged and what price increases would you need in the European Materials and American Materials businesses to cover the energy cost rises that you envisage?

That's the first question.

Secondly, in the Netherlands, could you flesh out your outlook for that construction market please?

And finally on the dividend, could you explain the Board's decision as to why the dividend was held.

Was it the pay out ratio; was it future acquisition opportunities, what was behind that reason to end that long record of dividend growth?

Thank you.

Well if I can just take the last question first John.

I think as we said at the interim, when we maintained the interim dividend we said the decision with regard to the final dividend would be made in the context of the economic and operating environment at the time and our own profitability, cash flow, balance sheet strength.

And I think, given the strong cash flow and given the strength of the balance sheet we have, the Board has decided to maintain the dividend being very conscious of the long-term record on dividends and the importance of it to a very solid shareholder base.

So I think that is the thinking.

Each dividend decision is a discrete decision, as we've said in the past.

I think we've been happy to be able to maintain the dividends, probably uniquely in the sector and being able to do so over the last three or four years.

In relation to the Netherlands and the outlook there, Erik, maybe you might like to add on that?

Looking to the Netherlands, I think today we say the market is flat, so we had big declines in the last two years, especially residential market's very important to us for our Concrete business; but also for our Distribution business.

There are some signs of better environment maybe for the second half; it's a bit hard to read them because it's positives and negatives.

So maybe the second half will even be a bit more positive than flat.

Very important for us also is renovation in the Netherlands, we have a big part of our Distribution business working in the renovation sector, which was not too bad last year already.

So we expect that to be a bit positive for this year as well.

So overall, I think the worst is behind us in the Netherlands, but still cautious.

And with regards to energy John, I think looking at our main energy requirements in our heavy Cement business in Europe which will be called, [Petcoke Electricity], Henry might say something about the level of hedging there and the sort of price increases you need to cover the increases on those.

Our total energy bill in Europe materially is about EUR300 million and we're seeing about a 10% increase in that in the year.

Two-thirds of that is the fuel for the kilns and power about half/half.

We're very well hedged on both of those for the cement operations.

The last EUR100 million is really in the downstream businesses and it is a mix of energy and diesel, etc.

And we've got, I would say, probably 50% hedging in that.

And then on the primary fuel end, for every EUR2 increase we're looking to offset at least half that by using alternative fuels.

So we have the investments that we did last year coming on-stream, the capital investments over recent years and better efficiency there in Finland, in Switzerland and in Ireland and we're getting the advantage of that with higher usage of alternative fuels.

So in per tonne terms, primary fuels and electricity are going up about EUR2 per tonne, and we're clawing back about a EUR1 per tonne of that in alternative fuels.

And obviously we're hoping to pass on the full impact of that in price increases.

On the energy side in the US obviously liquid asphalt is a major component there, as Mark has mentioned, we have significant winter storage capacity up to about 40% of our needs.

We have a good level of liquid asphalt in storage at price levels which are not dissimilar to last year, and we're continuing with that winter fill program as we move through the next couple of months.

A lot as always will depend on liquid asphalt prices in the main season and where they trend to over the next few months.

On price increases, if I remember rightly, is it 10% in liquid asphalt?

Well of a tonne of--

Is that where you're looking at for 2011 on '10?

On liquid asphalt?

Yes.

Well at the moment, as we say, what we have in storage is at a price level compared to what we had in storage this time last year.

So we see no change in terms of what we have in storage, but a lot will depend on what the prices are as we move into the main season, particularly in the third quarter and where liquid asphalt trends to.

Last year it's fair to say liquid asphalt prices market stayed high right through the year.

Yes and in our view it's all about the margins here, and I think we're, as Myles [remarked], we've got about 40% of our needs in storage now.

We have the ability and the relationships to take that to 60% if that's what we need to do.

At this point we don't react that quickly at this point because we don't know exactly where it's going.

But last year we had a little bit more storage this time of year, last year, and we missed some opportunities for good buys later on.

So we're leaving some capacity open for us to see that, but if we see that it's going the other way, then we've got that capacity to use if we need to do that.

The other piece on the other fuels, like diesel and so forth, within the index and what we're probably protected about, at this point we're probably hedged about 30%.

But we've obviously -- historically we've been able to pass those costs over on the transportation fees, as that comes.

So still we feel comfortable where we are in our energy at this point.

Thank you.

I think three if I could.

The first one, just to Mark if we can stick on the US if we could Myles, just on this asphalt point again, just to have an idea because I think you guys buy about 2 million tonnes a year.

Was your input price last year around the $400 mark, just for us to get an idea of the quantum.

And if you have to go out into the market for the extra 40% that isn't stored, just for us to think around the mechanics of what you need on asphalt prices.

So is your input cost around the $800 million for the business in the US, was the first one?

The second one the US was just on readymixed and building products, the key input costs cement, what's your latest view in terms of what you believe will be the input pressure you're going to see on the cement prices coming through this year?

Then the last two were, just on impairments, the [EUR22 million] associate I probably missed it, it's maybe in the statement, but just what associate does that relate to?

And then the final one was on carbon, coming back to it, has the strategy changed in that are you still banking and keeping some of your carbon for the future Myles, or does the EUR67 million represent a kind of clear out of whatever carbon credit you had.

And what's the view going forward on that level?

Thanks.

Just on the associates impairment, obviously by definition in associates, we are not a majority shareholder, we're a minority shareholder in associates.

And while we have taken an impairment charge in relation to associates, I don't think it will be correct to be identifying which associate that is against, given the larger shareholding others have in those particular businesses.

With regard to asphalt, pricing in the US, I think I'm correct, and correct me if I'm wrong, but I think last year's average price was more about $500 per tonne for asphalt, if you take it right through the year, more in that range.

So your figure is right in euros, but it's a dollar number.

The $500 last year, the '10 figure, just one way of looking at that [$160 million] of paving and contracting profit shift, clearly that's a volume and price component in there, but actually what was the $500 the year before because it will help?

Well I think what we said in our statement this morning was that I think our liquid asphalt prices went up by 14% in the course, in 2010 compared to 2009.

So I think that's, correct me again if I'm wrong, but I think it was a 14% figure we quoted on that.

In relation to CO2, Henry, would you like to make a comment on that?

The allocation rules for the EU are being finalized and will, I think, be set in stone from about the middle of this year.

And it looks now, based on our projections going into the next phase which will take us up to 2020, that we will have allocations to cover our needs.

The outlook on price remains uncertain, but I think the higher priced carbon which was forecast a couple of years ago, is not materializing.

And that, in our view, the price for carbon is going to remain quite modest into the next few years at least.

So we've continued to invest in alternative fuels biomass fuel efficiency, heat efficiency and clinker ratio reduction to be at the best level possible in terms of CO2.

So, we're committed to having a very good carbon footprint and the rules now look as if we will get adequate allocations right up to 2020 which we're pleased with.

Sorry just cement input cost pressure?

John right now it's kind of early to really predict exactly what's going on.

I think it's going to be very difficult for the people to raise cement pricing in some markets I think it's going to be regional, certainly Florida where the capacity are there.

Arizona, for example, where we are, I think we feel like that they're probably flat there.

Obviously the cement players are trying to raise price and they've flowed out increases, now whether they'll hold, we'll see.

My guess would be in some markets, probably the North East, maybe out West, they'll be able to raise prices there, maybe modestly, probably $3 a tonne, something like that maybe.

That's just a guess right now.

But we feel like that, on our readymixed businesses, we'd certainly be able to pass those prices through.

So I don't think it will really impact us much in 2011.

Thank you.

Thanks John.

I think there'll be a number of questions just on obviously -- very topical in the current environment, on the energy side.

But I think, Albert, you might just say something in relation to the savings you've shown up there and the level of progress right across the business, in terms of reducing energy costs, be it through alternative fuel usage and also in the US in relation to [wrap] usage.

Yes, I think if you look at the presentation today, as Myles went through each of the divisions and we talked about the actions and plans, I think in five of the six divisions we specifically referred to the excellence programs -- the operational excellence programs that have been delivering value through our businesses.

Now in the high-energy utilization businesses, the high energy uses businesses and the Materials business in United States and in Europe; we've been targeting these for the last three or four years, and in fact it featured quite prominently in our Investor Day in November.

We've made quite significant gains over the last three or four years and how we are dealing with the energy volatility that we're seeing now and price increases going forward for this year, of course it's in terms of how we hedge our purchases going forward.

But we've made some very significant gains in terms of our energy usage, the amount of alternative fuels, as Henry talked about, the use of biomass alternative fuels, that of course reduces down our energy requirements in our Cement businesses.

Also when we look in terms of reducing our clinker ratio, again we're extending our cement across a smaller base of clinker.

On the US side the increase we have seen -- progressive increases we're seeing, both in two areas, in our Asphalt business and in the increase in recycled asphalt.

And also in [coal pits] again, that reduces our energy cost.

So we're dealing with it the smart way, we're not just trying to hedge our bets and buy smart, which of course we should do, we're actually looking for long-term sustainable benefits in our businesses while actually trying to get more out of less inputs and we're achieving this, year on year, we're making all the small gains.

When you put them together over three years or four years they were quite impressive and I think we're well up there in terms of the industry standards.

But this is a long road we're on and we will keep pushing it up.

One of the things we might want to mention on that, we talked about all the prices going up.

On our asphalt plants for example we've had the flexibility over the years, we've put the capital in there, to the plants, to be able to use different fields.

So natural gas in the US is very -- opportunities for us right now.

They're declining and we've switched over all our asphalt plants to burn natural gas, which is a saving for us.

Could you just comment a bit more on how you see the outlook in the US residential market this year and also the US RM&I market?

And then if you could give the incremental benefit to sales and profits in '11 from acquisitions made in 2010?

And then maybe just briefly kind of outlook comments on Central Eastern Europe, your main markets there please?

Okay, well I think in terms, as we've said in the statement, it does seem at the moment as if residential, particularly new residential in the US is bouncing along the bottom.

I think there'll probably some tough comparatives over the next few months because the second quarter of last year had the final burst of some of the tax incentives.

But our sense will be that hopefully we'll see a bit more progression upwards as we move into the second half of the year on new residential.

On the non-residential side, I think we're looking at further declines overall for non-residential in the current year but more moderate than last year.

And I guess, looking at some of the leading indicators, the ABI indicator, which does tend to fluctuate a bit, particularly this time of the year, I think the trends there are suggesting that non-res will have bottomed late '11, early '12.

With regard to Eastern European markets, I think, Henry, you might comment on Poland and Ukraine on what we're seeing there.

The year has started well in Poland; clearly the weather is very different to this time last year.

We're seeing very good volumes at the moment.

But overall, I mentioned earlier, that by November, at the tail end of last year, we got to a 5% level above the previous year.

And we'd be hopeful of seeing that repeated and there is good momentum there at the moment.

In Turkey the market is very strong, especially in the Eastern part of the country and there's evidence of that filling out.

And again I think we're looking at 5% to 10% growth there in the current year.

Ukraine and the Russian market has picked up and Ukraine has suffered from imports from Russia in the last couple of years.

We see that drying up and we see the Ukrainian market itself picking up and we should see some benefits from that.

And we've seen some exports grow ourselves into [Benelux].

So generally a fairly good demand picture.

And hopefully the start of the strong early demand in the current year, compared to a very weak early demand last year and whether we'll set the platform for some decent price progression in the course of the year in those particular markets.

With regard to the incremental impact next year from '10, acquisition activity, Maeve, if you might provide us with that?

Yes, the total sales from the acquisitions in 2010 were about EUR800 million and about EUR200 million of that is reflected in the 2010 numbers, so there's a further EUR600 million to come through in sales.

And we'd be expecting a margin of somewhere between 6% and 7% on that in the light of the mix of that business.

I've just got one question you'll be relieved to hear and it's probably directed at Mark.

But US readymixed concrete prices, they were minus 5% last year, you're talking about trying to recoup the higher cement cost in terms of raising prices this year.

To be fair, some of your competitors have also talked about rising readymixed prices in the US.

Why should they rise in this environment, I guess, is my question, is it just cost pressures or is there anything else behind it?

Well I think the volumes probably will be a little bit better in 2011.

We, last year, our pricing was down 5% on our readymixed business and that was really because of the cement pricing that was there.

I think it's a good question, it depends on what -- where you are in the part of the country.

Pretty difficult in Florida, Arizona and so forth, California, where the volumes are -- I think a severe stretch for them to get prices up there.

But some markets are -- west pieces of the country are probably going -- the volumes are going to be higher and I think they're going to focus on -- in those areas that they have an opportunity to do that.

Maybe in the North East for example, or the demand is a little bit higher than what they've had in the past.

I think it's early to see where they are, obviously they're trying to move the price and we'll see how it comes.

I think they'll be able to do some of that, modestly, I'm not sure.

We'll know probably by May or June where we are.

Two questions, very quick.

The first one on the working capital, really for Maeve, we've got 11% of sales, should we expect that to stay at that level or is there further scope to reduce it and that's against the background of like-for-like sales going up in 2011?

And secondly just on the acquisitions, as we saw a step up in the acquisitions in H2 from H1, should we expect a step up for the full year 2011?

Well, I think we never make projections with regard to acquisition spending, Mike, but I think we have seen, as you mentioned, a good pick up in the second half of the year.

I think we're seeing an increasing flow of opportunities.

As always these things just don't deliver to schedule on a monthly basis, it will tend to be a bit lumpy.

But I think we would expect to have a good deal delivery level for 2011 as a whole without putting a precise number on it at this stage.

I think working capital, Maeve.

Our focus remains relentless on keeping working capital down and keeping the inflows, obviously if we see the volumes and top line improvements, working capital will move up as well.

But we'll be doing our best to keep it down, so we think there's probably a little bit more scope to -- on inventories, to keep improving.

Thank you.

Two if I may.

One I suspect is probably for Mark because it revolves around the President's DOT proposal.

I'm just wondering what his view on that and whether the congress is [going to like] to vote that spending increase through?

So that was number one.

The second one was on acquisitions, again returning to the old theme.

What I wanted to ask is, what have you guys learnt through the last three years or fours year about what businesses to buy for the Group going forward.

What's changed your mind about certain businesses that you're going to stick clear of or you're going to be more attracted to going forward?

Well I think on the acquisition side, I think the major lesson I suppose we've learnt is that how important it is to stay disciplined in the acquisition process and not to get carried away with valuations, particularly in what we saw at the peak of the cycle, in terms of the multiples that were paid for particular deals and the projections for price and volume that underpinned those valuations.

So I think we've stuck very religiously to our tried and true metrics, a cautious view of growth, a cautious view, particularly in pricing.

And I think all of the evidence will support the fact that we were right in that through a very hot period and a very toppy period in terms of deal pricing in the sector.

I don't know, Albert, whether you'd like to maybe add to that, in terms of some other aspects of what we've learnt?

I think a few things we've learnt, I think we're very good at what we know well, familiar businesses in familiar markets where we can take businesses and we can make those businesses better.

We can do that by taking the knowledge that we have about those businesses and transporting it to that new business.

So actually fundamentally making the business better.

We can do it also by creating synergies, by bringing that business into our network by creating synergies internally and externally with the business.

So we get market synergies or we can get internal synergies.

Both of those things are within our control and that's what we like to do.

We don't like to buy businesses where we're just betting it on market growth and price improvements and just cross your fingers and hope it works out because we can call markets wrong as much as anybody else can.

We like to have the two.

I think also we wrap our businesses around core strategic clusters of businesses that do well.

Where we have an intensification of our footprint, where we've got a strong footprint of businesses, that's where we seem to do well.

So when you see us do deals, don't ask about the footprint deal, ask about what's the next three, four, five years of deals because they're the ones that are going to create the real value.

So I think we really appreciate it, building it around a core cluster of businesses that we understand, how we can deliver value and how we ourselves can deliver that value.

And if the market comes with it as well, well that's great, then we get two out of two.

I think we also understand where we've struggled and that's just as important to know where we gain as where we -- how we improve and how we don't, or where it becomes more difficult.

I think we understand that better.

And I think also the idea of looking at all the times, as we look at our business we look at it as a -- we take a portfolio approach as much as you guys take a portfolio approach.

We have to have some businesses which are steady solid businesses generating cash and that's what they do and then we've got to invest in growth areas as well.

And then when we do step out we have to step out in an area where we know we've got a fundamental understanding of the business, we do our homework right, in terms of trying to understand the marketplace, having the resources, the human resources, the financial resources, the productive capacity to be able to deliver on those.

So I think we've learnt those lessons over the last three years or four years, but we knew them for the last 34 years as well it's just we maybe honed our skills a little bit better in these more challenging times.

Mark with regard to the White House proposals?

Well, what we're trying to focus on right now is getting through this year and I think that's what we're trying to get through.

Just to give an update on the view, you know the spending would stop on Friday if we don't extend that, I think the congress for -- they were out last week, they just came back to Washington last night.

So our view at this point, and I'm pretty clear on this, I think they're going to extend it for two weeks, Friday to March 18.

And then have the debate on what's going on on the cuts, obviously with the elections in November there's a lot of pressure on taking the budgets down.

One of the things that's been encouraging to us is all the talk about the restructuring and how we're going to take out of that, the infrastructure piece that's not -- never come up, so would we feel comfortable that once this extended net debt, it will stay at the same funding that it was last year, around [$42 billion].

Our view and I think the industry would look at it that way at this point, so we probably will get this resolved by the end of the year, but that would just get us funded through into September.

So the view is to get this done by the end of March and then we get into the 2012 budget, which gives into the White House proposal on the new six year bill and add [$50 billion] up front on that.

So it's very difficult to say how that's going to work out.

I think it's encouraging to us that they're talking about that, the heads of focus of administration, they're committed to infrastructure and I think there's a lot of things in what you've seen in that $556 billion projects got a lot of high speed rail in there, I think that's going to be difficult to sell.

But the other part of the infrastructure is up 48%, or whatever, so we're encouraged that that's on the table.

Now whether or not that gets done, obviously the 2012, there's a new election, whether timing, we can get that done this year, I don't know, we'd hope it would be but I think that we would feel comfortable that the funding will get through, as it is, through this year.

And if we don't get the six year bill done this year our view would be they would extend the existing through 2012 as well.

So I don't think it's a negative [horse] and the positive piece is in play and it's a committed [fierce] administration to key in on the infrastructure.

It's hard, that's all I can say at this point, it's a lot of speculation on how this will play out.

I think the positive will be that unlike in previous renewals when we had a very reluctant White House in the Bush years to actually put any commitment behind infrastructure, we do have very vocal comments on record from the White House with regard to infrastructure from the current administration.

But, as Mark says ,we'll just have to see how it plays out.

I'm very conscious that we haven't taken any calls from those listening in, so maybe we could do that now in the 10 minutes or so that we have remaining.

Thank you.

Robert Eason.

A lot of my questions have been asked, but just one specific one on operations and average and the price cost margin spread.

If you're looking at the detailed analysis that you've done in terms of the bridge from '07 to now and just look at the volume effect in terms of profit, first the sales effect, you're talking about an incremental margin of 40% on the way down, how should be look on it on the way up?

That's my first question.

And just in terms of all your comments about energy and where it's going, etc., and how important it is in the context of CRH, where do you see the price cost spread for the Group as a whole this year?

Do you think you're going to be ahead of the curve a bit, given your hedging policies, or do you think you'll still be lagging on the recovery of such costs?

I think, Mark, on your first question, maybe I might pass that to Albert.

I think on your second one, Robert, I think assuming that what we see in current oil markets doesn't persist, we would feel that the projections we made at the end of last year, the hedging that we have done, the price strategies that we have in place would see us ahead, in terms of that cost price spread for 2011.

What we can't legislate for obviously is how persistent these current elevated crude prices are going to be and how that's going to feed through into downstream products.

That's something we're going to have to monitor very closely over the coming months.

It's something we're going to have to -- if it does persist, it's something we're going to have to recover with some of the surcharges, for instance, that we would have applied on delivery costs during previous spikes back in '08.

And something we're going to have to push even harder, if it does persist in our pricing, particularly in mid year.

But based on the view we had at the end of last year, based on the hedging that we'd done, we would've seen ourselves ahead for the year as a whole.

Just to be clear on that, if costs stay at current levels in the oil markets ,you will have to go for --

Well I think if we see crude at where it is at the moment $110-plus, and we're going to have to see how that feeds in, and that's obviously going to require, if it does persist through the year, some additional pricing elements to try and recover that.

With regards to the leverage Albert.

Yes, good morning Robert.

It's a very difficult question to answer.

You talk about 40% leverage on the way down, of course that has been a changing number as we've gone through the years.

At the very start of the decline in 2008 it was a higher number, of course it's a lower number as we come through 2010 because we take more costs out and we take more capacity out.

And leverage on the way down is not the same as leverage on the way back.

And it also depends on what businesses come back first and quicker, and also what spare capacity, so we've more spare capacity for instance in some parts of our business, maybe on the cement side or on the heavy materials side in the United States than we do perhaps on the light side because the light side of our business didn't suffer those declines.

What I can tell you is, as we've said, we've got significant excess capacity in some of our markets and when the volumes come back in through there you will see the benefits of that leverage there coming through the businesses.

In terms of putting a number on it, it's very difficult because it depends on the geography, it depends on the spare capacity, because when we say costs are permanent in nature, that means, yes, there is an [end growth] that is a permanent cost take out.

But there's an also -- [another growth] that are fixed within a certain volume level and when you've finished that volume you're going to have to add more capacity or basically restart the capacity.

So your fixed costs may go back up again.

So it's a very difficult question to answer in terms of putting a number on it, but I can tell you in all our in businesses we've got significant spare capacity and certainly for the next couple of years we would like to see if there's going to be significant upside leverage when -- as markets come back.

And sorry, just probably one qualifier there as well.

Just in terms of the outlook you talk about your return to like-for-like growth, when you're talking about that are you talking about both on a volume perspective and a price -- well, obviously on a price perspective, yes, but on a volume perspective as well?

Your question is in terms of growth, in terms of are we seeing volumes coming back as well as prices, is that what the question is?

No, the outlook you talk about a return to like-for-like growth.

Obviously there's going to be a positive pricing element there, are you also talking about a positive volume element?

Again across our businesses we said if we could look at the US part of our business, Mark said, on the heavy side of the business, we think that volumes may be slightly down, flat or slightly down, on the residential and non-residential regard, we've had to say that again, probably flattish with last year.

I think, as you look forward on volumes coming forward in the European parts of the business, I think those businesses that are more exposed to the light side of the business, you may see some volume growth and I think the businesses that are more exposed to Eastern Europe.

So I think you may see some volume, particularly in the second half of the year, you may see some volume improvements, yes.

Harry Goad.

Two questions please.

You make a reference to challenging cement prices in India, which I know you have done previously, is that getting worse compared to what you've previously seen, or getting better or reasonably stable?

And then secondly, can you talk a little bit about the outlook for the distribution market in Germany?

Maybe, Henry, you might comment just on cement pricing in India.

The pricing in India throughout, I suppose, the last 18 months has been volatile.

I think we've see prices all over the country affected.

In the southern region there is overcapacity and that remains the situation.

Prices have been much more stable in the last three, four months, and we're hopeful that that will continue.

But until such time as some of the surplus capacity is taken up by the growing demand, I think we have to be wary of the volatility that's there.

Erik, distribution in Germany.

Yes, we have three different distribution businesses in Germany; we have the Builders Merchants ,which is 50%,50% RMI and new housing.

New housing is picking up in Germany.

It's hard to put an exact percentage on that but it will be between [1% and 5%] picking up of the housing in Germany.

Important in our business also is the RMI part which is still strong in Germany.

We have DIY in Bauking as well, also relying on strong demands in renovation business.

And we have a SHAP side, our heating and plumbing businesses in the northern part of Germany, who performed very well the last two years and we expect to continue that.

So that is a strong performer, they were even doing better than previous years, so that will continue to be strong in Germany.

So overall, the markets in Germany, we rely very much on the residential part of that market.

We have in [Ille] we have also business which is very strong in the residential part of the market, residential paving.

Performed very well last year, so we also expect that that will do very well this year in Germany.

Thanks Erik.

Paraic Quinn.

A couple of questions a European focus to these questions.

First of all, just could you remind me in terms of the broad mix for the Polish Materials business by end market.

And on Poland then, just in terms of whether you could provide any update on the pricing improvement that you have seen in the second half of 2010.

And maybe then just finally in terms of a comment on Finland and Switzerland, in terms of the current demand backdrop that you're seeing on the non-res side there.

Henry, that falls into your territory.

We've seen the switch from housing to infrastructure over the last 12 months as the EU funded program for major infrastructure work in Poland continues.

So infrastructure is a very strong component of it, probably somewhere in the 45% region.

Housing is continuing to be smaller than you would expect.

There's quite a big backlog, I think, in housing there but it remains in the 20%, 25% region and industrial commercial, which has a fairly significant public spend part to it as well, is the remainder.

In Switzerland we've had a record year last year, the economy remains strong, there is good housing growth and continuing strong infrastructure spend by the government and for the time being the outlook remains strong.

Finland was significantly impacted in 2009 and there was a -- and I think we had expected this and it did come through, a good bounce back in 2010.

Finland was not affected by any banking crisis and its exports have resumed.

The vote in 2010 was helped by a stimulus package in public housing which has come through.

There is continuing reasonable spend on infrastructure and we're hopeful that there'll be a pickup in commercial and industrial work going into the new year.

Thank you, and just on the pricing improvement in the Polish market?

Prices were stable throughout last year, although down on the previous year, but they remained stable.

And we've seen some price increases already and there's, I think, a clear need to get some price improvement in that market this year.

Thank you.

We have no further questions from the phone lines.

Okay well I think we seemed to have exhausted the questions from the phone lines.

Just in terms of treating everybody equally we have some questions in as well too on the web.

One question from Andrew Belton, Credit Sights is, the percentage of consolidated sales and EBITDA that come from the so-called austerity countries, which will be, I guess, Ireland, Spain and Portugal.

I think we -- our distribution and product footprint in those countries is very, very small, so I think you can take it that the numbers we've given you for Europe Materials represents the vast bulk of our presence in those countries, because it's primarily a Materials presence that we have there.

A question with regard to the development spend capacity that Maeve mentioned.

Maeve referred to ability to spend EUR1.5 billion over the next 12 to 18 months.

The question was, is that an expectation of development spend or is it the maximum capacity?

We never give an expectation of development spend, so -- on that.

That's just broadly indicative of our capacity, assuming trading conditions continue to be relatively tough over the next 12 months.

Obviously if things improve we would have some additional capacity.

And the other thing I would say is that our disposals continue and obviously the realization from disposals does further boost our ability to devote funds to development.

Another question was, more information on selling price increases.

What increases for materials have been attempted in the US and Europe, are they sticking?

I think we are beginning to roll out our cement price increases in Europe and also our materials price increases as the season picks up in the US.

But it's in the early stages of that, so we'll have more information to provide, in regard to pricing, in our later communications in the course of the year.

But, as I mentioned, we have strategies for moving prices ahead in all of our businesses in 2011 and we're acting on those particular strategies.

Another question related to contracting margins in the US which were clearly under pressure in 2010.

Are we seeing signs, in terms of backlog evolution, that make you more optimistic for 2011?

I think, Mark, you've already dealt with it but you might like to just add on that.

Yes, clearly that was a problem for us last year on the margin on the construction piece.

I think we felt, in the last quarter, that kind of stabilized there, our backlogs going into this year; the margins are up a little bit.

So really, most of our work will be bid in the next two or three months to see.

But we think that the margins are not going to get any worse than they were last year.

And on the program that Albert talked about on the operations excellence and whatever, that's a focus for us on our construction margins, to take a look at that.

So we think that we'll be a little bit better in 2011.

So I think we've exhausted the questions from the various sources.

I'd just like to thank everybody who attended here this morning, those who listened into the webcast and asked questions over the air and also submitted questions on the web.

Thank you for your attention.

If you've any more questions which we haven't resolved in the course of this presentation, you know where to contact us and that's the Investor Relations section of the CRH website.

Our next communication to the market will be our AGM updating statement on May 4.

And again, just to thank you all for attending and listening in this morning.

Thank you.