CRH PLC (CRH) 2011 Q2 法說會逐字稿

Good morning, everybody. You're all very welcome to this webcast which accompanies the release of our interim results this morning, results for the first half of 2011.

I'm joined here this morning by Albert Manifold, our Chief Operating Officer, and by Maeve Carton, our Finance Director. Maeve and myself will handle a brief presentation covering the half-year results and the outlook, and following that, all three of us will be very happy to take your detailed questions.

You've seen the results this morning and the key points of those results are highlighted on the current slide that you can see here on the screen; a good advance in profits with EBITDA of 10%, with operating profit ahead 56%. Margins ahead, driven very much by our Products and Distributions operations; a balance sheet showing a good reduction in net debt, compared with the equivalent point last year; net debt at June 30 EUR3.9 billion, EUR0.8 billion lower than at June 30, 2010.

On acquisitions we spent EUR163 million cash outflow in the first half of the year, but with deals completed in the subsequent weeks, and most particularly the acquisition of VVM in Belgium, our total spend to date is now at EUR380 million.

You'll remember that we advised last year that we were disposing of certain business units, primarily in our Europe Products and Distribution operations. And significant achievement was delivered in the first half of the year in that regard with total proceeds from disposals in the first half of the year of EUR392 million.

And finally, we have maintained our interim dividend at the same level as in the interim 2010, continuing our strong record of dividend delivery over the decades for our shareholders.

The key highlights in terms of numbers you can see on this slide here; reported sales ahead 7% in the first half of the year; like-for-like sales up 5%. Obviously, very strong growth in the first quarter, which compared with the very weather-affected first quarter in 2010. And first quarter's like-for-like sales were ahead 11%.

That rate slowed, like-for-like, to 2% in the second quarter, but the second quarter of last year had a boost in terms of some recovery from the weather-affected first quarter. So overall, for the first half of the year, like-for-like sales ahead 5%.

EBITDA in Europe up EUR61 million. Our US EBITDA was also ahead in dollar terms, but with the weakness of the dollar, the reported euro numbers were behind the first half of 2010. And as I say, a margin advance, which you can see here in this slide, at both the EBITDA and at operating profit level, driven again very much by our Products and our Distribution operations, again, emphasizing the importance in the balanced nature of the Group. And that margin advance contrasts very much with the margin development you'll have seen in the first half of the year from many of our peers on the heavy side of the industry.

Taking a look at our results in a little more detail, and starting with an overall look at the total performance from our European divisions, you can see here an improved performance. Despite the impact of higher input costs, which resulted in margin declines in our Materials businesses in Europe, profit and margin improvements in our Products business, and an excellent advance with the benefit of acquisitions, and good repair, maintenance and improvement demand in our distribution activities. So overall margins increased from 8% at EBITDA level in 2010 to 8.4%, with also a good increase at the operating profit margin level.

Looking a little more closely at the elements of our European business. Firstly, starting with our Materials businesses here, we've provided on this particular slide some detail of the volume development in the first half of the year in our Cement operations. You can see, obviously, in the austerity economies in Ireland and Portugal, which accounted for about 20% of annualized EBITDA in 2010 in this particular segment, significant volume declines in the first half of the year.

But a much more positive performance in the stable countries, in Switzerland and Finland, and our developing regions overall showing good volume development as well. And even in India, which you'll see there which had a slight volume setback in the first half of this year, we had very good price growth after a very tough year in pricing in 2010, and overall profits in India were ahead.

So overall, volumes ahead in our Materials business in the first half of the year; overall Cement volumes ahead about 4.5%, 5%, but pricing a challenge, and price increases progressively implemented during the first half of the year, but not sufficient in the first half to recover the higher input costs.

Looking at the Product side in Europe, good profit and margin improvements here. Our Concrete business, a tough couple of years, significant restructuring, higher revenues and good profit advance in the first half.

Our Clay business, higher input costs on the energy side, not fully recovered by pricing. But with some once-off benefits arising from restructuring, our profits in Clay also moved ahead in the first half of the year.

And our Building Products business also showed a good increase for the first half of the year. And that 1% increase you see there in sales is obviously affected by the divestment during the first half of our Insulation and Climate Control businesses. So on a reported basis, our sales for this business, excluding divestments, were ahead 7% or 8%, so very good profit and margin improvements here on the Product side in Europe.

On the Distribution side in Europe, an excellent first half performance. Benefits from acquisitions and from good repair, maintenance and improvement demand across our footprint on our Builders Merchanting side, and also, to an extent, in DIY. All Builders Merchanting operations in the various countries in which we operate were ahead in revenue terms, and also ahead in profit terms.

In DIY, like-for-like sales were relatively flat, reflecting subdued consumer confidence in the Netherlands, which is the big element here in this particular business, but with good cost control measures and also, procurement benefits. We were able to increase our profits and our margins in our Distribution business in Europe.

Following the buyout of Bauking, as you remember, we stepped up our stake in December of last year from 48% to 98%, and we're now consolidating fully the sales and revenues in that particular business with a small 2% minority interest, obviously, but we now have got very well balanced Distribution business in Europe.

As you can see on the slide there, in the first half about 35% of revenues sourced from the Benelux, about 30% coming out of Switzerland, 20% from Germany, and the remaining 15% combined coming from France and Austria. So a very good footprint here, and an excellent performance in the first half.

And just maybe draw your attention to the EBITDA margin in this business that we delivered in the first half of the year of 6.2%, I think compares very favorably with some of our peers in the distribution segment in Europe who've already reported.

Looking at the Americas, while our results are ahead in US dollar terms, obviously, the weakness of the dollar versus the euro has impacted the results when stated in euros. In our Aggregates business input costs rising there too, and challenges on the costs recovery side and pricing. But we had a good performance, as I'll mention in a moment, in our Aggregates business, which limited the first half margin decline in our Materials side in the Americas.

In our Products side, significant benefits from restructuring. And our Distribution business in the Americas, which was one of the most resilient of our businesses in 2010, has continued to make progress in the first half of the year. And it's a business that's very much weighted in terms of profitability to the second half.

Looking to Materials, as I mentioned our performance Aggregates limited our margin decline. We've provided, on this particular slide, some details in terms of the total volume growth, the heritage volume growth, and then the movements in pricing and in unit variable costs. And I won't go into those in detail; you can see them clearly on that slide.

Just to say, in our Aggregates business, we had good first half volumes. We had some larger projects, which had a negative impact on price, but we're good on the volume side. And overall, with the benefits of cost efficiencies in our Aggregates operations, we reported improved Aggregates profits in the first half of the year.

Asphalt was somewhat more challenging, higher input costs not fully recovered in our first half pricing moves, so profits here slightly lower in the first half.

Ready Mix, profits also lower. Pricing remains very competitive. Transportation and fuel costs were much higher in the first half of the year, so profits here lower.

And in our Paving and Construction business margins continue to be impacted by very significant competition in this particular segment. But overall, as I mentioned, our performance in Aggregates limited the margin decline. And I think, if you look at our first half margin decline again compares well with peer comparisons in the first half of the year.

Our Products business in the Americas had significant restructuring during the course of 2010. And you'll remember that we combined our Precast business, our Architectural Products business, and some elements of the MMI acquisition from 2006, we folded them into one larger Building Products group, achieving significant reorganization benefits, and also increased benefits from cross-selling and packaging our various product offerings under this umbrella. And those benefits were strong in the first half of the year, and our profits improved in this particular business.

In our BuildingEnvelope business, most of you probably know it more familiarly as Glass, again, tough market conditions on the commercial side, but profits ahead, again with the benefits from restructuring.

And some disposal impact here. Again, we sold at the back end of last year, you'll remember, one element of the MMI acquisition, the Ivy Steel business; that was loss-making. So you can see there on the slide a negative impact on sales, but a positive impact on EBITDA, and an operating profit with the disposal of that particular operation.

So overall, good improvement in margins in our Products business in the US. You can see an advance at both EBITDA level and at operating profit level of over 1% in the first half margin.

Our Distribution business the Americas, as I mentioned earlier, continuing progress. Exterior Products, the roofing and siding end of the business, had similar profits. A lower margin sales mix in the first half of the year contributed to that.

Our Interior Products business, wallboards, ceiling panels, you're familiar with that, probably more severely affected over recent years because of its exposure to new commercial construction, actually saw some improved conditions in some of its major States in the first half, particularly California, Texas and the Carolinas, and profits improved in that particular business.

So overall, sales ahead about 13% in US dollar terms, EBITDA margins maintained at last year's level, and a good improvement in EBIT margin there. And as I mentioned earlier, this is a business which last year, just to give you a sense of the seasonality, had EUR80 million of EBITDA for the year as a whole, and about EUR60 million of EBIT, so it is a business that is biased to the second half of the year.

So overall, before I hand over to Maeve to deal with some of the financial aspects, just to recap on the overall margin progress that we've shown in the first half of the year.

You can see here EBITDA margins for the various elements of the business. You can see in Europe Products and Distribution positive RMI trends and restructuring benefits have contributed to good margin improvements. In our Americas Products and Distribution business, again, we've had benefits from our products reorganization in the course of 2010 and in earlier years, so that, despite the margin reductions in our Materials businesses in Europe and in the Americas, we've been able to show an overall improvement in our margin for the first half of the year. And I think that comes back to the product balance that we have in the Group.

That balance between Materials, Products and Distribution has stood to us very much in the first half of the year, and compares I suppose with more difficult margin performance and outturns for buildings that have a pure -- for players in the sector who have a pure heavy side orientation. So again, our balance standing to us with that margin progression in the first half of the year.

So with that, I'd like to hand over to Maeve, who will deal with some financial aspects of the results, and I'll come back later just to wrap up the presentation before we head to Q&A.

So, Maeve, over to you.

Thank you, Myles. As Myles said, I'm going to look at some of the key financial numbers, and also a quick overview on development spend for the first half.

Myles has already talked about the operating performance of the Group, so what I'm going to concentrate on in terms of the financial numbers is the other income statement captions.

As you can see here, the profit on disposals and interest costs for the first half of the year are broadly similar to last year. The share of associates profit after tax is down a little bit from last year, and that primarily reflects the disposal of the Trialis business in South West France which we sold in the first quarter of this year.

So the effect of those changes, together with the improvement in operating profit, is that our profit before tax went up by EUR70 million in the first half of the year, a very significant increase. And that significant improvement in profit before tax resulted in a significant improvement in earnings, and also supported the maintaining of the dividend payment for the first half.

On development spend. Myles mentioned that up until last weekend, we'd spent EUR380 million on acquisitions. That included 21 million [sic - see results page 2) acquisitions which we spoke about in the development update at the beginning of July, and then a further seven acquisitions since then.

The spend in the first half of the year included 12 acquisitions in our Materials platforms, primarily in the US, with the acquisition of VVM, which Myles spoke about, in Belgium, which greatly strengthened our Materials position in the Benelux countries, also strengthening our Products business in that area with the addition of 1.5 million tonnes of cement grinding capacity. And that also brought the balance of our spend of -- the EUR380 million is more evenly balanced now between Europe and the Americas, with approximately 55% in Europe and 45% in the Americas.

We've talked about the strong balance sheet of CRH, and on this slide, we've put a couple of the metrics that express that strength in terms of the way the markets look at it. Firstly, our net debt figure of EUR3.9 billion at the end of June. That represented 2.4 times EBITDA for the 12 months to June. That's a significant improvement on the equivalent number at the end of June in 2010.

Also, our EBITDA to net interest cover at 7 times is significantly better than this time last year, and also significantly better than the limit in our covenant, which is 4.5 times EBITDA cover. So we're showing good improvement in both of those measures.

Since June, we've raised a new bank facility, EUR1.5 billion of facilities under a five-year term, so they mature in July 2016. A consortium of 13 international banks have participated in that facility. It also involved the deletion of a number of the covenant requirements that we had in our previous financing, so now the key remaining covenant is at 4.5 times EBITDA to net interest cover.

As part of organizing that facility, we replaced some EUR600 million of existing facilities, so the net effect of all of those changes is that our cash facilities, our cash plus undrawn facilities, are now at about EUR3 billion. So that gives the Group very significant financial flexibility, and has put us in a very strong financial position.

Another way of looking at balance sheet strength is the maturity profile of the Group. This slide here shows, for each of the next number of years, the amount of the gross debt of EUR5 billion that you saw on the previous slide falls due for repayment in each of the next number of years. So as you can see, there's no undue bunching of maturities, and indeed, the cash balance of EUR1.1 billion that we have on our balance sheet at the end of June will allow us comfortably to repay the next couple of years, even before we think of the significant cash generating capabilities of the Group.

And finally, another way of looking at our balance sheet strength is to put it in the context of the sector as a whole. For this slide, we've used the net debt to EBITDA measure, and we've used the figures as published for six peers and CRH as at the end of June. Of course, net debt to EBITDA is a measure where the lower the number the better. So the lower the multiple, the greater the financial flexibility and strength of the Company.

So as you can see here, CRH stacks up very well, relative to its peers; we're among the lowest in the sector. And that, combined with our ratings, which again are among the best in the sector, and the ratings we've shown in this slide are the Standard & Poor's ratings, so that puts in context the very strong balance sheet of CRH, and the strong flexible position we're in at the moment.

So with that, I'm going to hand you back to Myles who will look after the outlook for the year. Thank you.

Thank you, Maeve. Just to wrap up, you've seen, obviously, in the results published this morning the increase that I mentioned earlier in profits and margins, the advantages of the balanced footprint that we have, and the balanced nature of our businesses serving infrastructure, non-res, and residential across the world. And I think you've also seen the benefits of the significant restructuring measures that we've taken over the last three to four years.

The backdrop for the second half of the year; obviously, we've seen significant downward growth revisions over recent months, and also, we've had very significant volatility and turbulence in financial markets in recent weeks. And both of those factors add very much to the risks and uncertainties for the second half of the year.

However, I think the factors which have benefited and delivered for us in the first half of the year remain in place for the second half, and as a management team, we are focused on continuing to deliver on the operational and commercial excellence programs that we have put in place over the last number of years.

We're also focused very much on achieving the price improvements necessary to more fully recover the input cost increases that we've seen in our energy-intensive business in the first half of the year, and we are focused on delivering a year of progress for CRH in 2011.

So I thank you for your attention during the presentation. I think we're now happy to deal with your detailed questions and answers. We have until about 9.45 to do that. We have questions coming from a number of sources, from the floor here in Dublin, from the phone lines which are open, and also then we will have webcast questions.

So if we would open first of all with the questions from the floor here in Dublin, and then move to those on the phone lines, and then on to the webcast questions. And Albert, Maeve and myself will be happy to deal with your various questions.

A couple of questions. On the Americas Materials division, you're into the second half of the year, July and August. Could you try and give us some color around how that's progressing in terms of the paving construction season?

Also, you mention in the statement about the 10% increase in Asphalt costs in the first half of the year against, I think, it was a 3% price rise in Asphalt mix, you might give us some sense as what progress has been made in terms of Asphalt mix price increases that you've achieved in the second half of the year, and how we should think about margin progression in that division in the second half.

The second question is really just trying to get a sense of the net debt number, Maeve, by year end, and if that includes or excludes the proceeds from the potential disposal of Secil. And then looking at that, and given the new facilities which you have, does that actually change the potential acquisition spend over the next 18 months? I think you've highlighted in the past the potential to spend EUR1.5 billion; has that now increased, do you think, given the strength of the balance sheet? Thank you.

Barry, I think you mentioned three questions; I think there are probably six or seven there (laughter). I'll ask Maeve maybe to deal with the financial questions in relation to net debt and acquisition capability. Maybe I'll just deal with the Americas Materials questions.

I think you've seen, obviously, good like-for-like growth in volumes in the first half of the year. We're only half way through August, but the volume progression has continued to be good in the six weeks since the end of the half year. But we do expect that overall, for the second half, the pace of like-for-like volume growth will be somewhat slower than in the first half of the year.

You mentioned the 10% rise in liquid asphalt costs. I'll just point that that's in liquid asphalt; we have some ways of mitigating that obviously through use of RAP, and also it doesn't translate into a 10% increase, as you will have seen in the first half in terms of our overall variable costs. So input costs are still continuing to be high. I think we will achieve some further price progress, though, on Asphalt cost recovery in the second half of the year.

And I think margin progression in the second half will very much depend, obviously, on how we do in recovering those particular input costs. But I think there are challenges there in that for the second half of the year. I think overall, last year we achieved an EBIT margin of 6.5% in our Materials business in the US. I think it will be challenging to assume -- or optimistic, perhaps, to assume that we'll quite maintained that level for the year as a whole. I think it's likely to be somewhat lower, but not significantly lower than that for the year as a whole.

Maeve, maybe you -- ?

On the net debt, Barry, we expect the net debt at the end of the year to be well below last year, and probably well below -- or below EUR3 billion. That does not include any proceeds from the disposal of Secil. As you know, there is up to 180 working days over which that could materialize, so we're not assuming that will have completed before the end of the year.

In terms of acquisition capacity, that's still what the extra finance -- or the new financing does is enhance the maturity profile of the funding available to us, and gives us greater flexibility. But our financing capability for acquisitions would still be in the region of EUR1.5 billion over the next 12 to 18 months.

Just a follow-on question on the Materials side, and specifically in Europe. Again, what is your outlook in terms of margin recovery as you go into the second half, because you clearly indicated in the presentation that your margins have been under pressure because of the costs, so what is the likelihood of further recovery in the second half?

And on the tax rate, you've clearly said your H1 estimate of 18% is indicative for the full year. Can we use that as the run rate, going forward into 2012, because it is very much at the lower end of your tax rate in previous years?

And in terms of your CapEx, how do you see your CapEx plans now given that the world is a bit more difficult than maybe a couple of months ago -- your CapEx for this year and into next year?

Thanks, Robert. Maeve, you might handle the tax rate and the CapEx questions, and then Albert, you might come in on the Materials Europe question there from Robert.

The tax rate, Robert, we've estimated that the tax for this year will be 18%, which is roughly the same as last year. For going forward, thereafter, it will very much depend on the profile of profits; as profits improve in some higher tax regions you would expect to see that trend edging up as markets improve.

In relation to capital expenditure, you'll have seen that the capital expenditure for the first half of the year is higher than the first half of last year. And we would expect that trend to continue somewhat for the rest of the year as we invest in some of our markets to develop and meet growing demand. The spend for the rest of this year will be probably in the range of 75% of depreciation, at that kind of level, which is a little bit higher than last year's low level.

But still continuing to be well below our depreciation levels, and tunable to the markets or consensus as they evolve as well.

So Albert, Europe Materials.

The margin recovery in the Materials business in Europe, very similar picture to what we're seeing in the United States, very high cost increases coming through and really trying to pass them on. In some markets we've been able to get price increases in our Cement business; in others not so. So the austerity countries mentioned, obviously it's been very difficult to get price increases there.

But in markets such as Poland and in Finland it's been reasonably good, Switzerland as well. The real challenge will be to keep those price increases going during the course of the year. The way the season works is that one tends to introduce your price increases in the April/May period, the start of the season, so the first half of the year hasn't really got the full benefit of those. So in terms of how they roll out through the second half of the year, and we get the benefit of that.

But it's been challenging, and our costs generally in our heavy side businesses and our Cement side are up about 10% in terms of the energy, and it's been very difficult to try and pass those on.

On the downstream businesses, of course, we have had cost increases as well, primarily on the energy side, again diesel costs and electricity costs. We have been able, in the better markets, to pass them on, but really all you're doing is just holding it steady; you're passing on what you've received. Again, in the tougher markets, it's been more difficult to pass those on.

So the margins will remain under pressure, as you've heard from all the other players, and we'll do what we can to try and pass them through as much as we can do, but it's going to be tough for this year.

A couple of questions. First, in terms of your working assumptions on the US highway funding. I know before your sense was that it would be post the next US Presidential election, and whether that's still the case, or you think a number of elements, I suppose, have changed since then in terms of disputes between US policy makers. And maybe in terms of when you're looking yourselves to 2012 what you have within your own budgets.

Second question, in terms of going back to the Secil sale, I'm just wondering as part of that sale whether that precludes you from reentering the Portuguese market, should you wish to do so in the next couple of years.

And then maybe finally, just in terms of your acquisitions. As you say, you've done EUR380-odd-million since the start of this year. Just a sense in terms of the pipeline and how really it has changed, and maybe if there's been any shift in terms of your own focus since the full-year results in particular.

Thanks, Paraic. I'll deal maybe with highway funding and acquisitions; maybe Albert, you might talk about the Secil sale.

Just on highway funding, at the moment obviously we're working on the temporary funding basis at the moment for 2011. And there have been some proposals on Capitol Hill from both the Congress and from the Senate; one from the House of Representatives proposing a six-year program at a much reduced level of spend, a two-year Bill proposed from the Senate which would maintain the spending levels at the current levels.

Our own view is that there is a lot shifting in Washington at the moment, and it's quite a tough political setup there in terms of reaching any agreement, as we've seen with the debt ceiling debate over July and into early August.

I think though that, given the importance of the construction and the infrastructure sector, particularly for employment in the US, our sense is that something short term will probably be the outcome from this debate; something short term that would, we would hope, maintain spending levels at the current level of funding, which is about $42 billion a year from the Federal Government.

But obviously, it's holiday period in the US at the moment; the debate won't reengage again until the autumn, and we'll be following it closely and looking at the news flow out of there.

Meanwhile, as you've seen, we've been able to deliver like-for-like volume increases in our businesses, given our market footprint for the first half of the year.

Albert, Secil, do you want to say a few words on that?

There's nothing in the agreement that would prevent us from going back and reinvesting in there, but Portugal is in a difficult place and would have to represent good value, as all the business in CRH would need to.

On the acquisition focus, obviously, as you've seen in the first half, we continue to add to our existing footprint, and indeed expand it in some areas, with particularly the VVM acquisition in cement grinding and readymix in Belgium, and also a readymix plant there in France, which adds to our Materials footprint in the Benelux area.

You're familiar with our Cementbouw readymix and materials cement and aggregate trading business. So it builds on that and solidifies our position there, and gives us some opportunities in terms of cement sourcing for that grinding business in Belgium.

And we continue, obviously, to bolt on to our footprint in the United States, but we're also looking actively at Eastern Europe, and also have some opportunities in Asia. Particularly, coming up over the next couple of years, we will have the opportunity to take our stake in the Yatai Cement business in China, to take that up from 26% to 49%, and also to build on our 50% joint venture in India, both of which have been showing positive trends in the first half of this year.

And Albert, you might just say a few words about the scale of the position that we have in China, which I don't think is fully appreciated by people because we do report it as an associate on the associate line, so we book our share of its profit after tax. But it's a very significant business.

We get a lot of questions on our emerging market position, and as most people know, here at CRH we take a very careful view about investing money, wherever it may be, be it the United States, Europe, or in the emerging markets. We invest money to make returns; we don't invest money to put flags on maps.

And for the last 15 years we've been investing in emerging markets, starting with Poland, Ukraine, Russia, India, and China. We very carefully build our positions, we're very careful with our money, and we initially went into China. You may recall we bought a small business; we owned it 100%, and then we stepped up after about 1.5 years to buy a 26% stake in a very substantial business.

And that business now, over the course of two years, has ramped up very significantly. It has a cement capacity in this current year of 26 million tonnes; it'll sell more than 20 million tonnes of cement this year, that one business.

Now just to put that in context, the whole of the United States will consume about 70 million tonnes of cement this year, so our one business in China has a capacity of 26 million tonnes and this year will sell 20 million, and next year will move onto something more than that. Obviously we'll [roll out] as demand comes through.

Our stake is 26%; we have very strong operational influence; we've got the position of Chief Operating Officer and CFO in the business; we've a very significant role in running that business. We've invested downstream in that, and we have the option to step up to a 49% position in that from our 26% stake.

And in the two short years that business this year will generate an EBITDA of over EUR180 million. So it's a very significant business, and you can see when you get the investments right, and invest carefully, properly, and get people focusing on profitability, you can generate profits in businesses.

Similarly in our Indian businesses, we've a very fine position there; we've a very good partner in Andhra Pradesh. We have not chased volume this year; we took a step back in volume this year and maintained our price discipline, and that has served us well in the market. Our profits have grown quite substantially. It's about education of ourselves in how we do business in India, and also in our partner.

And then we'll move beyond that partnership. We may move with our partner, but we'll move beyond it in a controlling position, and we'll step up. But again, only as we see the opportunities, and we see the value that's there.

So we're establishing very significant footprints in Asia, and building upon the very, very fine footprints we have in Poland and in Ukraine. As you may know, we are finishing out this year our brand new cement plant in Western Ukraine. It's a EUR250 million investment which will build the biggest dry process plant, make us the number one player in the Ukrainian market, with the lowest cost production there. And I think we can build upon that, and build a bigger integrated business.

But those positions I think show we take a careful, steady, but progressive, and very profit-focused views on how we grow in the emerging markets, and they're starting to deliver very significant results for us.

Thanks, Albert.

Two questions, please. Firstly, within the Americas Materials business, what would your outlook be for aggregates pricing in the second half of the year? Would you expect, once again, to see a negative mix effect? Are there some large projects, for example, in the pipe?

And secondly, within Europe Materials business maybe you could just say a few words on some of the strong markets that you've been involved in this year, in Finland, in Poland etc., and what the outlook there is for the remainder of this year and into 2012 please?

Thanks, Gerard. Two questions there on the pricing for the second half in our Aggregates business in the Americas, and on the more positive Materials markets in Europe.

In our Materials business, our average delivery in the first half on pricing has been affected by some large contracts for low-value fill material, so base material. They won't be quite as significant in the overall mix in the second half of the year, so we would expect second-half pricing to be similar to the second half of 2010.

In our Europe Materials footprint, as we mentioned, and as you mentioned in your question, there the strong markets have been Finland, Switzerland, and Poland. I think we see all of those markets as having continued momentum for the second half of this year.

For 2012, obviously it's a bit early to be forming views, particularly with some of the volatility we've been seeing in markets over recent weeks. However, infrastructure investment in Poland, which is contributing very much to the cement demand, should continue to be strong, because it is well supported by the EU.

In Switzerland, infrastructure investment on tunnels and rail networks is continuing and probably, Albert, has another year or two to run. Finland I think also has a good prospect. Finland, I think we should remember, had a very significant banking crisis itself in the early '90s, which led to a very subdued investment profile for about a decade, and it has come back very strongly from that. With the memories of that particular crisis, the Finnish economy is very well balanced, and doesn't have any significant excesses. So the Government there is well placed to continue to invest in infrastructure as well.

So we see those three areas which are very important, in terms of their overall contribution to our Europe Materials division, continue to be positive through the second half of this year, and into next year.

Just two additional questions, firstly on cost cutting. In light of economic conditions looking more difficult in the second half, can you look to readdress the cost base again, and is there any areas you feel that you can cut additional costs?

Secondly, with the insulation and climate control disposals now complete, is there any other areas that you feel you may look to dispose of in the second half? Thank you.

Thanks, Murray. Albert, will you talk about cost cutting?

Yes. This is our busy period; basically the construction season in Europe runs from late April/May all the way through October, and the United States, particularly in the northern parts of the United States, tends to be a bit more competitive in the summer months. So we really are maxed out at this moment in time. So we're focused very much on producing our product, selling it, and getting it out to the customer; that's what we're working on at this moment in time.

Our cost reduction programs are in place; we're working on those, and we're delivering on those in line with our expectations. Just to remind everybody, our program this year is about EUR135 million, EUR136 million. It nets down to about EUR100 million of saving; we've about EUR36 million of cost to achieve that. But at the end of the season, we'll have to look again at our forecasts for 2012, our budgets, look at our capacity, see how we sit, see where the world is then. If necessary, of course, as we've shown for the last four years, we will go back in and we'll relook at our cost base, if we need to, and take further action as necessary.

But at the moment, we're continuing to deliver on the program we have in place, and serving our customer, and that's going to be the story until September/October, until the season is over, and then we'll relook at it again with 2012 in mind.

With regard to your question, Murray, on disposals. I think we continue to look at realizing value from surplus assets and surplus property right across the Group. And as you can imagine, with the scale of our footprint, 35 countries, and the number of locations we have, there are further opportunities to realize value in the second half of the year. But there are no significant businesses on the block for the second half of the year. It will come mainly from small-scale realization of surplus properties, and units, across the business footprint.

I think, if we don't seem to have any more questions from the floor here in Dublin, so maybe we will turn to the phone lines, and start to take questions over those.

(Operator instructions). Paul Roger, Exane BNP Paribas.

Just three quick questions, if I may? Firstly, on the European Products business, you've talked about competitive pressures in a number of the Clay businesses, I think you mentioned in particular the UK, and also some areas in the Eastern Europe. Can you elaborate a bit in terms of what's behind that, and say a bit in terms of your full-year outlook for gross margins in that business?

Secondly, on US non-residential markets, I think previously you've talked about the rate of decline moderating; it's quite interesting that you haven't used that term again in the statement today. Have you become a bit more cautious, and what is your outlook for the US commercial markets?

Then just a general question for the Group overall, are you still expecting like-for-like growth and volume growth for full year 2011? Thank you.

Thanks, Paul. On the US non-residential side, yes, we are seeing continued declines, but not at the pace that we would have seen in 2010, and I think I may have mentioned that in my presentation earlier. But it's still a tough overall segment.

There are some brighter spots in it, however, in terms of industrial investment, where we are seeing investment by the tech industry, which we have some contracts into. We're seeing some investment in warehousing and logistics, particularly in some of the big transport hubs in a number of the States. Obviously, the energy side is also benefiting from continuing investment in areas such as shale gas and areas there.

So there's some bright spots there, but they're small in the overall context of the non-res sector, and it is continuing to decline in the current year. But the pace is not as sharp as it was in 2010.

On the European Products side, and your questions on Clay, Albert, could you deal with that?

Yes. Our Clay businesses are spread across three geographies, obviously Germany, Poland, and [Ibstock], our business in Britain. Britain has been fairly solid actually; we did well last year, we got good volume growth, and we started again this year with good volume growth. But we've been hit by very high gas prices during the course of this year, and it's been difficult to pass those on. Now we have seen the benefit in our Ibstock business of some of the restructuring we did last year, and we got some one-off benefits because of that in the current year. But it's going to remain difficult I think in Ibstock for the remainder of the year.

Germany and Poland, much more difficult. We've had to do some very significant restructuring; the volume outlook on those businesses looks quite challenged. But as I said, Ibstock is the big part of our business there, and we made good gains last year. We won't hold on to all of those. We are doing our best to pass on the gas price increases, but they've been very significant. But like all the clay players in Britain, it's been quite challenging, Heidelberg through the Hanson business, and [Weinerberger] again seeing all those challenges. But we think we're holding our own there against those. But it'll remain challenged.

In terms of like-for-like growth, Paul, obviously it's difficult to have a full visibility at this particular point in some of our markets. In Europe, we're in holiday period at the moment, so activity levels tend to dip traditionally in July and August; the autumn gives a better sense of how underlying demand commences. But overall, we would expect to see some like-for-like revenue growth in the second half of the year, probably, though, more modest than what we've seen in the first half.

Sorry, can I just follow up on that? When you say like-for-like growth, would you also say volume growth as well?

I think it depends. I think, in our Europe Materials business, we will expect to see like-for-like volume growth in the countries that are performing well, obviously. But we will have declines again, sure as eggs in the austerity economies in Ireland, Portugal, and in Spain.

In the US Materials business, we would expect to see some like-for-like volume progression again in the second half, but will be more muted than in the first half, particularly on the Ag side because we did, as we say, have some large [fill] contracts in the first half.

Okay, thank you very much.

Will Morgan, Goldman Sachs.

I have a few questions, please. The first one is just on your Europe Materials business. I hope I'm looking at this correctly, but I think, in the first four months of the year, you talked about organic growth, like for like, of about 4%. I think you're talking about a first half growth of about 6% like for like. I just seemed a little bit peculiar to me given, I guess, some of the weather comps going on now. I was just wondering if you could talk about what happened in the last couple of months of the second quarter.

The second question is regarding the Secil business. I just wondered if you were able to say what profit that business made in the first half; I didn't see it in the press release, so that would be useful.

Finally, I was just wondering, in terms of your working capital trends, I think you mentioned last time that there was some opportunity to maybe improve some of the inventory management. I just wondered if you could give some guidance to how you see working capital developing for the full year? Thank you.

Maeve, would you deal with the working capital, and also the like-for-like trends, the question there from Will?

Okay. On the working capital, well, you'll have seen that, for the first half of the year, there's a significant outflow that reflects the seasonal nature of the business as activity picks up during the middle the of the year. Traditionally, in the second half of the year, we have a significant inflow of working capital. So we would expect that trend to continue in 2011 also, and we expect the figure for the full year to be a slight positive; it won't be as big as last year's number. It will be also dependent on sales and activity just in the last couple of months of the year. So if there's very good weather at the end of the year, that can have a significant impact on working capital just at the end of the year.

What we talked about in terms of improvements in working capital was that we had made very strong progress in the last couple of years on the debtors and creditors side of working capital, and that it was a little bit slower to get the reductions in inventory. So we're working very hard on that this year, and hope to see some improvements on that at the end of the year.

The question regarding the like-for-like trends between AGM statement and June, Will's question there?

The overall like-for-like trends for Europe Materials are 6% for the first half, compared to 4%, as you said at May. The month of May and June last year in Europe Materials, particularly in Poland, suffered from very significant wet weather. You'll remember there was all kinds of flooding in May and early June last year, which affected the trends in the last couple of months. So that has been the major reason for the better improvement for the first half.

With regard to Secil, Will, I think the publicly quoted figures Secil made about EUR120 million of EBITDA in the full year of 2010. The bias would have probably been a bit more to the second half than to the first half and, obviously, profitability would have been lower in the first half of this year.

But I think, given our joint venture nature of that particular transaction, I think we wouldn't want to be quoting the precise figures at the moment.

Okay, thanks. If I could just follow up with one question actually? In terms of your balance sheet, you've basically talked about how you expect the debt situation to improve; it seems like there's obviously an uncertain economic outlook. I just wondered, in the context of all of this, given your strong balance sheet you can execute on deals if you need to, how do you reconcile that with still offering a scrip dividend.? I just wonder how you think about that, whether you might be thinking about moving to make that a full cash payment, going forward?

I think the scrip dividend is something that we found shareholders value and appreciate, and obviously, the shareholders make their own choice whether to take cash or whether to take scrip. So I think it's a shareholder-friendly alternative to offer, and we would continue to offer it. Many companies that had cancelled it have actually reintroduced it in recent years.

Okay, thanks.

Harry Goad, Credit Suisse.

I appreciate it's reasonably early, but would you be able to give an indication of where you think, at this stage, the total energy costs will be in 2012, relative to the 2011 number as a percentage number?

Thanks, Harry. I think, if we look at our 2010 outturn on the energy front, our total energy costs accounted for about 9.5% of revenues in 2010. What we have seen overall, on a blended rate in the first half of the year, is the overall energy bill increasing by somewhere between maybe 10% and 12%.

So I think, if you were to apply that to the full year, obviously you would see probably the energy costs and energy related costs, including liquid asphalt, that component as a percentage of revenue is probably growing from somewhere 9.5% last year to be somewhere between 10% and 11% for 2011 as a whole.

But would you be able to, given the contracts you have in place for forward buying, would you be able to give any indication where you think that number will head, or just at least a trend in that number for 2012?

Well, it's difficult at the moment, because obviously we've seen crude prices coming off over recent weeks. Also, as you can probably appreciate, one of the factors we also track is how diesel prices are tracking in the United States as well, because that's a big input in our transportation budget, and we've seen diesel prices coming off fairly steadily over the last three to four weeks from their peak.

So it's unclear as yet how all of that will work through in the remainder of the season. Hopefully, we'll see some moderation in the energy costs that we've seen through 2011 to date, and see that for 2012. It's really only when we get into the final quarter that we would be entering our hedging arrangements for 2012, so we don't have much visibility on 2012 at the moment in terms of the energy cost outlook.

Okay thank you.

Levon Babalyan, Cheuvreux.

Maybe one broad question related to infrastructure spending in the US. You said you hope that the steady level at $42 billion will be maintained. I'm wondering what is really the amount available there in the Highway Bill if there is no transfers from the General Fund, because given the austerity measures, the savings that the Federal Government will have to implement it's very likely that there will be no transfers from General Fund, going forward.

So if you just take fuel taxes, so it must be ring-fenced as far as I know, the ring-fenced revenue for this Highway Bill fund, how much cut that would involve to this $42 billion?

And the second part of the question; assuming such a cut takes place in the next month, would you be willing and able to take proactive measures to address the costs in anticipation of lower order intake next year? Or you will have to wait and see how it develops, to see how much the margins are hit next year and then, and only then, take the respective measures? Thank you.

Levon, I think Maeve's already mentioned the uncertainties in relation to the highway funding in the US, but the Highway Trust Fund is actually funded through to early to mid 2013. So I think as far as the cuts that might arise from that are not imminent in 2012. And I think that's going to be part of the whole debate and the whole outcome from the political process in relation to infrastructure funding. So I'm afraid very little visibility on that at the moment from ourselves or, indeed, from amongst the industry.

But you agree that there is a part which is like, they can't cut the part of the revenue that is dedicated to the Highway Bill, right, so there's some limit to the cuts, and the current Bill expires in September so there must be something new. I'm not sure what you referred to in terms of 2013.

I think the Highway Trust Fund is -- obviously you mentioned getting transfers from the General Fund; there were some significant transfers from the General Fund to the Highway Trust Fund last year. I think the Highway Trust Fund won't be exhausted until early 2013; I think that was one of the items in your question.

As I say we don't have great visibility at the moment, because we are dependent on the politicians and the decisions they make. I think one positive aspect is that all of the uncertainty with regards to highway funding is actually limiting the number of new projects that get off the blocks. And it's focusing a lot of this current spending and that's likely to continue on repair and maintenance, which plays more to our strengths. And we are also seeing an improvement in State revenues.

Now they're still, obviously, in a difficult situation, but there has been a pickup in the course of the last six to nine months in terms of State revenues. And this year so far, we see the States actually contributing well to infrastructure activity and our footprint.

Okay, thanks, that's interesting. I thought that they have other priorities to spend on with the increased revenues, so you are seeing that flowing already to infrastructure?

We're not seeing a lack of commitment when we look across our 44 States. Obviously it varies State to State, but I think we're seeing continued good commitment at State level to the projects that are funded entirely from their coffers.

Okay, thank you.

Mike Betts, Jefferies.

I've got three questions, if I could? Firstly, you gave the sales split between Q1 and Q2, was the EBITDA split significantly different? I'm trying to wonder whether Q2 may have got more of the benefit of the pricing increases, so are you willing to split the trend in EBITDA between Q1 and Q2?

Secondly, a follow-up to Harry's question on energy costs, but this time in relation to 2011; how much of those costs of proportion is based on spot prices rather than hedged? I guess what I'm alluding to is how much of those are diesel and stuff like that?

And then the third and final question, US Roofing didn't seem to have got the benefit of the storm damage repairs that a number of other companies have referred to in H1, is that just because of your geographic locations, or is that more following through in H2? Thank you.

Thanks, Mike. On the storm damage question, I think it very much comes back to geographic location. Some of our peers in that particular segment in the US have more significant footprints than we have in the Southern States, which tend to be the areas that suffered a lot in the first half of the year from the significant storm and tornado activities.

In terms of the hedging on the energy side, we hedge a lot of our liquid asphalt, but not all of it. We can store about 40% of our annual requirements; the remainder is generally purchased spot.

Our diesel costs also would be very much done on a spot basis through the year and, hopefully, as I mentioned earlier, we'll get some benefit in the second half from the reductions we've seen over recent weeks in diesel costs, particularly in the US.

The area where we are substantially hedged for the full year would be in our Cement operations, which obviously are in Europe Materials.

You had another question, I think, in relation to the EBITDA split. The bulk of the EBITDA improvement, probably all of it, was generated really in the first quarter in common with everybody else in the industry. The strong first half this year, compared to the weather-affected first half in 2010, robbed some demand which, in 2010, went into the second quarter. And our overall EBITDA second quarter was flat to slightly down on the second quarter of last year.

I think you'll have seen those trends as well from the people who report on a quarterly basis in our sector. In some cases, many of them would have seen significant declines in the second quarter, but again, our footprint in terms of our Products, our Distribution, our Materials operations have stood to us very much in that quarter and, indeed, for the first half as a whole.

Okay, thank you, Myles. And then just one maybe for Maeve; just in terms of the disposal gain on the Secil stake, obviously as you quite rightly pointed out, it won't necessarily happen for 180 days, what sort of tax rate are you likely to pay on that? Should we just assume it's a difference between the purchase and the selling price and take your tax rate, or in Portugal or elsewhere where it's based on the specific tax allowances for capital gains?

There will be some allowances, but I think for a reasonable working assumption would be to take the Group tax rate.

Perfect, thank you very much.

[Yap Cohen], ING.

It's Ian Osburn from ING. I just wanted to ask on the US Materials business; it seems to me that you've had a slightly better performance on volumes than peers, and a slightly worse performance on pricing. Now, is this actually something that can be explained by geography, or is this CRH becoming a little more aggressive to defend its market share? And could you give us a comment on what you think has happened to your market share in Q2 and half 1 overall?

And secondly, on the Secil stake, this seems to be quite a good opportunity to reduce exposure to peripheral Europe at what's a very good price. But when I've spoken to both your IR department, and hearing your comments since then as well, it seems that management aren't particularly positive on CRH's position on this at all. If you could just give us some comments on where you stand on the Secil deal, that would be great?

And also the [BVV] acquisition in Belgium; just to try and gauge how long term you look at these businesses, are you looking with a view to the closure of the only cement plant in the Netherlands, which is expected in 2019 and, therefore, Belgium is expected to supply almost the entire Dutch market from that time, going forward? Did that feature in your thinking on that acquisition? Thanks.

Albert, would you deal with VVM and the last question there from Ian, and I'll come back in relation to some of the earlier two questions on Secil and on the volume price, the trends in the US.

The VVM deal was very much a classic CRH bolt-on deal. We have been involved in the Dutch readymix and cement trading market now for a number of years, since our acquisition of Cementbouw, and we buy and sell close to 800,000 tonnes of cement every year. We were buying that from other cement companies and just trading it on, as we were with Aggregates, and we had a very significant Readymix business.

As always, with CRH, we wanted to try and control our own manufacturing, particularly when it comes to heavy side materials, and we knew there were a number of trading operations, and a number of manufacturing operations in Belgium and the Netherlands. And this opportunity is something we courted for a number of years; we knew of VVM for quite some time; we knew the principles behind it. And we worked on them, as we always do, to do a deal.

And what we've done is we've managed to secure a manufactured source of cement for our operations in cement in Belgium and the Netherlands. Now currently what happens is that grinding station, which is VVM, it grinds clinker, and clinker is an intermediate product that you make cement from,. And that clinker is bought from contracts that come from China, come from Germany, from other parts of the world. We will work out those contracts, but then it gives us an opportunity also to plug it into our network of cement plants in Europe. So we can self-supply our own clinker for some portion of that cement demand in Belgium and the Netherlands.

So it makes us a stronger business, a more integrated business; it helps in our negotiations because we continue to buy cement. So it strengthens our overall footprint in what is a very, very important region for us in Northern Europe. So I think it was nothing to do with the fact that the Dutch market, which, of course, is primarily supplied from outside of the Netherlands; there's no lime store in the Netherlands bar on the very, very south east corner of it. It makes it a very important part of the Benelux in terms of how we supply cement, going forward, and we are very significantly now in control of a key part of that supply source. That was behind the VVM deal.

Very clear, thanks.

Just, Ian, to your deal with your question on Secil. As part of our development strategy over the years, in some areas that we've sought to enter where it hasn't been possible to enter in a majority control situation, or on a 100% basis, we've actually entered some joint venture arrangements with the ultimate objective, obviously, of being able to move to a control position over time.

That's worked out for us well in some areas where we've entered these joint venture arrangements. I'd remind you of our Cementbouw trading business in readymix, and in aggregates and cement, which we've been talking about earlier in relation to VVM. That was a joint venture in the Netherlands for a number of years before we moved up to 100% ownership. In December last year we moved our stake in Bauking in Germany up from 48% to 98%.

But not all of these efforts work out and, obviously, in the case of Secil, it hasn't worked out. We've been instructed in the arbitration process to sell our stake. We're ready to do that, and to move on. Not everything works out as you intend it, and that's been the tenor of our comments to people. We're not going to get into any more colorful comments, which you might like to tempt us into in relation to it, but that's just the situation; it's part of business. Some things work, some things don't, we move on.

In relation to the volume trends we've seen in Americas Materials in the first half of the year, obviously, we aggregate volume and price trends, as others in the industry do. But you're aggregating operations across many different States, with many different pricing characteristics, many different qualities of stone involved in that overall mix. And sometimes, when you have sharp drops in volumes, it can reflect well in price, particularly if those sharp volume drops occur in areas where prices are lower than in some other areas. And that may be behind some other trends you've seen for others in the sector in the first half of the year; we can't particularly comment and don't have particular insight into that.

All we can say is that, for our own businesses, we have seen good volumes in aggregates. There are have been some sub-base and fill volumes in that, which were larger than they would have been in 2010, and that's had a positive effect on volume, but a slightly dampening effect on price.

On market share, yes, perhaps we have gained some market share in some regions. It's probably at the expense of some of the smaller peripheral players in those markets rather than at the expense of any of the majors, because the bulk of our competition in the US infrastructure space and materials space comes from small to medium size players.

Excellent, thank you very much. Just a quick follow-up on your comments on Secil. Sure, it's interesting that you say some JVs don't work out because when you look at your returns strategy, your number one focus is on returns, it could have worked out far worse than the potential sale at the level which has been agreed during the independent pricing process as part of the arbitration. So do you not think that this has actually worked out not particularly badly, considering where it could have gone?

Well, I think certainly it's a fine business, it has a fine footprint in Portugal, has some good positions along the Mediterranean. I think the valuation reflects those positions, [and] long-term prospects even it with the tough outlook in Portugal over the next few years.

Okay, thank you very much.

John Fraser-Andrews, HSBC Global Research.

Three questions, please, in Americas Materials. Firstly, on the aggregates, the 2% fall in prices, which was a mix effect, could you indicate, if you stripped out those bigger contracts, whether pricing was still down, or was it flat?

Secondly, in readymix pricing down 2%, could you comment on your input costs into readymix and in cement, what the pricing you've been securing in the first half, please?

And the third question, in contracting margins, in that Americas Materials business, my recollection is that, in good markets around 2%, they've been under pressure. Could you indicate whether that business is profitable and, if so, whether it's getting close to that, or where it is in relation to that 2%? Thank you.

Albert?

Sure yes, on the pricing, as Miles indicated, there's a regional influence, a mix influence, and then there's the core business. If you strip out the regional influence because, as Miles said, there was some particularly big jobs, particularly in Ohio where we did a lot of sub-base work, which was big volumes at low prices. That meant we did higher volumes at lower prices.

So if you strip that out, and then just look at the core business and say, well, take out the mix, prices were broadly flat, I think you can say, against the core manufactured stone businesses. So if you take out all the noise, broadly flat in the first half of the year.

With regard to readymix prices and our cost increases there, the cost increases we've seen in the first half of the year have mainly come from higher diesel cost and logistic costs. We have not seen any cement price increases in the United States this year. CRH is a very big purchaser and a very big user of cement; we use 10 million tonnes of cement in our business every year. But we have not seen any price increases in the United States in the cement and, of course, that has meant that it's been continually difficult to pass on prices -- get prices in the Concrete business. But it means we haven't had to eat any of those cement price increases.

So the cost increases you're seeing in our Readymix business in the United States are primarily, if not all, due to higher logistic costs as a result of the higher diesel costs.

And on your last point on contracting, contracting remains very challenging and very difficult; it's still a profitable business for us. I would say the margins you are quoting there are too low, compared to the margins that we're seeing. We seem to do better than others out there. They are being squeezed and they are tight, but they're better than you're talking about.

Thank you.

Clyde Lewis, Citigroup.

Three questions, if I may, as well? One, I just wanted to check what your current expectations now are in terms of the US residential market; apologies if I missed a little bit of what you said going through your various businesses there, but I wasn't sure if I did. So just wanted an update on that.

The second one was coming back to second half price expectations; I'm just wondering if you can go through the markets that you're more hopeful for getting price rises, and ones which you're not?

And the third one, I just wanted to clarify something that Albert said, and maybe I again misinterpreted it, but were you effectively saying that you think second half or full-year margins in European Materials were effectively going to be slightly lower than last year's 9.4%?

Thanks, Clyde. Maybe I'll deal with the first one on residential, and maybe I'll deal with some of the price aspects, and maybe Albert can help me out on that as well, too. On the residential side in the US, bouncing along the bottom I think would be the way to characterize it at the moment. I think we probably will see that broadly continue for the rest of the year, would be our sense of that. Obviously, a bit uncertain at the moment as to how the recent bout of volatility in markets will impact just on confidence of potential purchasers on the housing side in the US. Obviously, affordability is very attractive at the moment in the US. The difficulty obviously is loan and mortgage availability. So that is an issue, and also confidence.

So I think those aren't particularly positive factors we had earlier in the year; expected that by this stage, we'd be seeing a bit more definitive trend upwards in new res in the United States. But probably the best way to characterize it is it's just bouncing along the bottom at the moment.

On pricing for the second half, maybe what I'll do is I'll just maybe make a few comments about US pricing, and Albert will make some comments on the European side of things.

I think we would expect to see flat to maybe slightly positive pricing on our Aggregate side in the US in the second half of the year. I think we will see somewhat better pricing on our Asphalt side on the back of some escalators which are related to input costs kicking through. On Readymix, I think it's going to remain competitive on the US side of things. I would expect the price trends that we've broadly seen in our Readymix business in the United States in the first half continuing through the second half of the year. On the European side, Albert.

I think, on the European side and the austerity countries, I think it's going to be very difficult to get further advancement on prices for the remainder of this year. I think there's still some opportunities both in Cement and, hopefully, in the downstream businesses in Finland for the remainder of the year.

I think in Switzerland as well, we might see a little bit of progress there on the downstream again, and in Poland on Cement, again we will see what that third quarter brings. It's all down to the volume. There's a real desire to get back some of the cost increases we've had to [ease]. It's challenging; the first range of price increases have settled in. We'll let them settle in, and we'll see if we can go again. And I think you'll continue to see good price progress in India and in China for the remainder of the year.

So I think there are some opportunities, but again, it will be tied into exactly how tough it is going to be in the marketplace. The better the volumes, the better the opportunity with regard to that.

On your third question, Clyde, related to margins in our Europe Materials business for the full year, Maeve, maybe you might comment on that?

At the risk to clarify a point that Albert made, the full-year margins for the Materials group was 9.4% last year, the EBIT margin. You'll have seen for the first half, the half margin was down almost a full percentage point, and we'd expect that the full year will probably reflect a similar kind of trend.

Okay, thank you. Could I ask Albert one more question on Ukrainian prices? You missed that one out, and I just wanted to see where your thoughts are on that market.

Ukrainian prices are up; Ukrainian prices are up about 7.5% year to date and off a lowish base. They should be up, and they should be up more than that, and I think we should see some progress maybe towards the end of the year. But they're up about 7.5% year to date, and maybe a bit of progress towards the end of the year.

As you know, Russian prices have been increasing and, if Russian cement pricing is going well, Ukrainian cement pricing goes well because, if it isn't, then it switches back into Ukraine. But at the moment, all the production on the western borders of Russia, on the eastern borders of Ukraine, is going into Russia. It's not coming into Ukraine; that's helping the supply situation in the eastern part of Ukraine which alleviates the pressure on pricing in Ukraine.

Great, thanks very much.

Thanks, Clyde.

Vishal Singhal, Nomura.

I have a small question; basically, this is on the acquisition strategy of yours. What we heard was you still have that target of EUR1.5 billion for the next 18 months or 12 to 18 months. I just wanted to know, in terms of the strategy, whether you would focus this for emerging markets, or US, or Europe area?

And also, with the current environment and the stress in the overall market, do you think if there will be an opportunity to acquire or do a large acquisition which can be slightly larger like EUR1 billion or a EUR2 billion kind of acquisition? Would you be interested in doing that, or would you still focus on bolt-on acquisitions? That's the basis question I have.

I think we're open to opportunities in any shape, form or size, and we have, I suppose uniquely in the sector, we have the capacity to do something of scale if it presents itself, and if the valuation is appropriate in terms of our metrics. I think what we are working on at the moment is actively, would tend to be the more traditional pattern of deals that you've seen from CRH, the small medium-sized bolt-ons with occasional larger transactions. And for instance, we had the VVM transaction which would have been EUR100-plus-million transaction thus far this year. So we're quite active on a number of areas there; who knows what might emerge over the next 12 to 18 months more widely in the sector.

As Maeve would have shown in her slides, the leverage pressures continue to be quite intense across the sector and that may, in time, provide us with some larger opportunities. But who knows? We can only speculate on that at the moment, but we have the capacity, and we certainly are prepared to commit that where we see opportunities at valuations that make sense for us.

Right. And in terms of the regions, which would be your focus regions?

Well, I think, as Albert outlined earlier when he covered some of our emerging activities in Asia and Eastern Europe, we certainly had a very sharp focus on adding to our footprint there. At the same time, where we see sensible bolt-on opportunities, which strengthen our positions and give us good early synergies and benefits in our existing markets, we're also prepared, as you've seen in the expend so far this year, to move on those particular opportunities. And we have the capacity to do both.

Okay, thanks.

Mark Hake, BofA Merrill Lynch.

Most of my questions have been answered. I've just got one actually, Myles, on European Distribution. Again, could you give us a feel for how trading's been since the half year, and also whether -- all the outperformance appears to have been basically on Builders' Merchants, what your feeling is for the DIY element of that business?

Well, that business, as we mentioned, the primary footprint for our DIY business is the Benelux, and primarily the Netherlands, and consumer sentiment there has been pretty subdued, although the fact is the economy is doing quite well in overall growth terms there.

But we made progress in the first half of the year in that particular business. More efficiencies, procurement benefits, we're focused on delivering those again in the second half of the year. Summer months, as I mentioned in the presentation, July and August, tend to be difficult months in terms of discerning trends in countries like the Benelux, France and Germany, because they are significant holiday periods. And it's really when normal life resumes in the autumn in September that you get a good strong sense of the underlying level of activity.

But we've had a good performance on the DIY side in the first half of the year. We think we'll also be able to deliver well on that particular business in the second half.

Okay, thank you very much.

July is a quite month, generally, in that particular business.

Ankur Agarwal, Nomura.

I just have one question on the dividend. Should we see a constant dividend in the first half of this year as a signal for a constant full-year dividend, or, given your balance sheet trend, there's cope for an increase in dividend for the full year?

You've seen, Ankur, improving cover in the first half of the year, and we would expect that for the year as a whole as well, too. But the dividend decision is one taken by the Board just prior to the announcement of full-year results next March, and that'll be based on all of the circumstances at the time.

Okay. So there's still room for a dividend increase, for example.

There may well be, but I can't prejudge the decision of the Board in March of next year. But certainly, we have an intense focus, as you're aware, on dividend. I think, uniquely in the sector, we have grown our dividend successfully for 26 years. We've maintained it over the last two years to a period when many have cut and suspended dividends. We're very conscious of our particular shareholder base and the importance they place on dividend, and that will inform our thinking in arriving at a decision in March of next year with regard to the final dividend for 2011.

Okay, thank you.

William Jones, RBS.

Just two from me, please. The first is around European Products. When I look at the organic operational gearing, it looks about an 18% drop-through, and that looks pretty strong in the context of the cost inflation you're likely to have seen. Can you just talk us through that briefly, please? Is it just the pace of the like-for-like sales increase that's done it, or should we expect it to abate, for example, in the second half?

And then the second question just around the cost saves, the EUR135 million or so of gross for the full year. Could you just give us a split, as it hasn't been mentioned yet, between the first half and the second half, please? Thanks.

The cost savings, Albert, could you deal with that?

Sure. Just on the leverage coming through on the European Products, it's not just with regard to extra volume coming in on the top line, it's actually as a result of the very significant work we did, particularly in our Concrete division in the European Products business over the last couple of years. We've done a very significant review of how we produce our products. We've retrenched back from multiple locations into three or four strong larger locations getting very much more efficiencies in our production process. And that's helped very much on our cost base, both in the Netherlands and in Denmark, in our Structural Concrete business.

So there have been made some very significant moves on that area there, and that has helped in the improved performance of that particular business.

Of our costs figures coming through there, the EUR136 million come through in gross first half. Maeve, do you have the breakdown [exactly]?

Yes, the actual cost savings in the first half of the year were about EUR90 million. So the second half will have the smaller proportion of the total.

Great, thanks very much.

Robert Muir, Berenberg Bank.

Can you just give me an idea, remind me, what proportion of your US Materials sales are [inter-department transport] you escalate are causes? And also how effective are those escalated causes? Do they cover things like diesel costs or transport costs, or is it just related to bitumen costs overall?

And then the second question I had was on the Dutch market. Do you anticipate -- what's your sort of working assumption on the basis of the changes just sort of the mortgage lending rules in that country? Do you see it'll impact sales at all, or do you think you'll still be strong in the remodeling market? Thanks.

I think in relation to one of the things we've seen over the last two years particularly is, notwithstanding good strength in the overall Dutch economy, and notwithstanding also good employment levels, very low unemployment levels in the Netherlands, the new housing market has been weak. And that seems to be a reluctance on people to take on new mortgages, given some of the imminent changes or rumored changes in the mortgage structures and the [liabilities] in the Netherlands.

I don't think we see that abating particularly over the next 12 months. I think the new housing market in Holland is going to continue to be a tough one. If I look at the Euroconstruct figures, they're just showing modest growth this year; about 1% in new housing, and maybe 2% growth in new housing in the Netherlands in 2012.

So I think certainly some of the concerns amongst the public there about changes in mortgage structures are weighing down on the new housing market in the Netherlands. I don't know what needs to happen to -- or what might happen to change that. I think it's going to continue for a period.

In relation to the US Materials side of the business, Albert?

Yes, just to remind you there, our Infrastructure business, our Infrastructure represents about 65% of our Materials business and, within that, the escalators only apply to the asphalt contracts, the asphalt business we have.

It's about 50/50; 50% of our State contracts have got escalators and 50% don't. So about half of them do and again, it's important to -- it's tied into the price of liquid asphalt, the bitumen price, not to the diesel prices, and there are collars around it.

So it has to move beyond a certain price, so it has to move maybe 10% or 15% before the escalator kicks in. So you gain or you absorb inside the collar, and then once it goes outside the collar, you then have to adjust your price. So it's not just as simple as you might think.

So does that mean that there's going to be effectively some sort of lag effect, given where prices have moved, input costs have moved to? Is that the source of where you expect your pricing to be better in the second half?

You can win and you can lose. At this current time of the year, one would expect the RAP price of liquid asphalt just stars to decline in the August period. It tends to come off; it tends to build up to August and starts to slip down then slightly.

But again, as I say to you, within the escalators, there you have a bracket which the price doesn't move. It's only when it goes outside that. It can be 10%, it can be 15%, depending on the individual contract. So there's a benefit or lose inside that bracket.

Okay, thanks.

Thank you. I think we have exhausted the calls on the phone line. If I look at the questions and answers that have come in on the webcast, I think they've been primarily covered in responding to the questions here on the floor, and also to the questions from London.

I think one question which hasn't been addressed, and that relates to benefits from CO2 trading and what we might expect for the year as a whole. Last year, you may remember our benefits from CO2 trading arising from the reduction in our cement volumes, which facilitated those trades, amounted to about EUR67 million for the year as a whole.

We would estimate currently, based on our volume outlook for this year, and based on current pricing levels for CO2, and obviously, that's one of the variables in this, that the likely benefit from that in the current year will be somewhere around the EUR50 million mark.

I think the other questions relate very much to outlook for US highway construction, CapEx outlook for the current year, margins in the second half, all of which, I believe, we've dealt with fairly comprehensively in the Q&A already.

If anybody on the web feels that those questions haven't been answered adequately in the Q&A here, do feel free to contact us, and we can get back to you directly.

So I'd like to thank you all here present in Dublin this morning for your attention and for your time. I'd like to thank those waiting, listening on the webcast again for taking the time to tune in this morning, and thank you all very much for your questions.

We look forward to talking to you again in our conference call in November when we will update on the trading outlook for the remainder of the year and what we've seen in the months of August, September and October.

So thank you all very much again. Any follow up questions you have, please direct them to our investor relations department in Dublin and we will get back to you. So thank you, and good morning.