CRH PLC (CRH) 2012 Q2 法說會逐字稿

Good morning, everybody. You're very welcome to our webcast this morning, which accompanies the release of our interim results for the first six months of 2012.

I'm joined this morning by my colleagues Albert Manifold, our Chief Operating Officer, and our Finance Director, Maeve Carton. And following a brief presentation, which will take 20 or 25 minutes from Maeve and myself, all three of us will be happy to deal with your detailed questions.

I'd just point out that we will be structuring the questions in three blocks; first of all taking questions in relation to our European operations, then moving on to our Americas and then finishing up with a block of questions in relation to any overall Group matters or financial matters. And I'll say a little bit more about that just before we move into the Q&A.

So with that brief introduction, we'll just get the train moving and look at our results.

Starting with an overview of our results, the key highlights from the first half of the year are revenues EUR8.6 billion in the first six months; up 5% compared with the first six months in 2011. But some significant exchange translation impacts here which contributed about 4 percentage points of that 5% revenue increase.

The underlying like-for-like sales performance was ahead just 1% with a decline of about 5% in Europe, offset by an increase of 8% in our American operations.

Our EBITDA outturn for the first half of the year, EUR0.57 billion; close to last year's level, as we would have indicated in our AGM updating statement in May.

And our overall margins down slightly, with an improvement in the US margins offset by a decline in Europe against a tough backdrop, which I'll say a little bit more about in a few moments.

Looking at the balance sheet, the reported debt level EUR3.9 billion at the end of June; similar to the EUR3.9 billion level at the end of June 2011. And that's not withstanding quite a strengthening of the dollar over the period which obviously boosts the euro value of our dollar debt. The exchange rate at the end of the period was about $1.26 compared with $1.45 at June, 2011.

Our operating cash flow, a key focus, as you know, of CRH over the last number of years has been cash flow and we do have a seasonal cash outflow in the first half of the year, reflecting the seasonality of profits and also the working capital billed into the main season of the year.

But, with good control on cash flow, we were able to report a lower operating cash outflow of EUR0.9 billion compared to EUR1 billion in the six months of last year.

And finally on the dividend, in keeping with our strong record of delivery on the dividend front, maintaining our interim dividend at EUR0.185.

So with those key highlights, we move in to looking in more detail at the businesses by region and also by business segment.

On this slide here you can see the overall outturn for our European operations. You can see that our EBITDA down 13%; operating profit also down. Sales, the reported sales were down 5%. That includes, obviously, translation, acquisition and some divestment impacts in Europe. So the reported level actually is the same as the like-for-like level when you strip out those particular items.

In Materials, the first-half profits were ahead, despite a tough first half in weather conditions, particularly in the first quarter of the year, and some weak market backdrops.

Our Products operations were impacted by poor first quarter weather as well and by weakening confidence in the eurozone.

And our Distribution business faced similar challenges to our Products business in the first six months, with particular weakness in the Netherlands in our Distribution business, there arising from weak confidence in the Netherlands, and also from a weaker start in Switzerland, although the Swiss market in Distribution has been more resilient through the second quarter.

So that's the overall picture in Europe for the first six months of the year. We'll delve a little, in the next three slides, delve a little more deeply into the detail of the three business segments in Europe.

Looking at Europe Materials, as we made clear in the statement, we did have the benefit in the first six months of some pension gains arising from restructuring of pension funds in our European Materials business and that, obviously, contributed to the results.

But when you strip that out, our EBITDA in the first half in Materials was flat, our operating profit actually increased by about 3% and our margins were stable compared to last year.

And I think when you look at the experience in our sector for businesses with similar geographic footprints, I think this has been a resilient performance in the first half of the year. And it has been helped by our new cement plant in Ukraine, which contributed well to the first-half results.

You'll see at the bottom of the slide there we provide a detail on the domestic cement markets for our operations, showing the underlying increase or decline in those particular markets and that's clearly set out also in our statement.

I'll just draw your attention to one particular market, which is obviously a very important one for CRH, and that is the Polish market, where you can see from the slide that our like-for-like cement sales were down 2% in volume terms in the first half of the year.

And that was a very good performance, in the context of an overall market in Poland which saw total volumes decline by about 10% in the first half of the year. And that reflects, to some extent, our own commercial actions but also, I suppose, the pattern of activity in our key market areas in Poland.

So overall, I think, for Europe Materials a resilient performance.

Moving on to our Products business, a weakening demand, as I mentioned, has been the backdrop to the performance of this business in the first six months.

There are also some pension effects here. We had a pension gain in this particular business in 2011, no pension gain in the current year, so that obviously exacerbates the reported declines that you see in the numbers on the left-hand side as you look at the slide.

If we adjust and exclude those pension items, our EBITDA was down 17% and our EBIT fell 23%; still sharp declines, but less significant than the reported numbers. And our margins were down roughly about 0.6 percentage points, 0.7 percentage points rather than the declines of 1.6 percentage points and 1.7 percentage points that you see on the slide.

Looking at the individual business units, it was a tough first half for our Concrete businesses, particularly our landscaping and our civil concrete businesses, which were affected by slower public spending in a number of the key countries.

Our structural business performed more resiliently than those other two elements, largely because our Danish business, which suffered for a number of years from a very sharp fall in Danish construction, has actually come back in the first half of 2012 as a result of restructuring and some growth in some segments there.

Our Clay business also faced some challenges, but, again, with the benefits of good restructuring efforts in recent years, particularly in our Continental European markets, we saw an improvement there in the overall result for Clay.

In our Building Products segment, which encompasses a number of different product areas, generally we saw margin pressures across the piece in this particular business segment in the first half of the year and we are responding to that in that business and, indeed, in the other businesses, with some further restructuring efforts in those activities.

As you know, we have been active in the Europe Product segment in recent years in looking at our portfolio and in disposing of some elements of that portfolio which didn't fit with our long-term plans. And that was reflected in a decline in sales in the first half of the year, so that the 11% sales decline you see for this segment actually reflects those divestments. The underlying sales decline for Products in Europe in the first half was of the order of 5%.

Looking at our third leg in Europe, the Distribution piece, here, I think again, a difficult first-half backdrop. I mentioned the like-for-like 5% decline in sales in Products. Actually, the decline in Distribution was somewhat worse; a like-for-like sales decline of roughly 7% in the first half of the year.

Our Dutch operations were particularly affected. We had bad weather in the start. We had a lack of consumer confidence. Dutch consumer confidence is at a three-year low at the moment, reflected in weak retail sales, weak demand in our DIY business. So that was obviously a significant drag in the first-half performance and our builders' merchanting suffered from a lack of confidence in new residential activity.

The Swiss business had a hit from weather in the first quarter, but has traded in a better fashion through the second quarter and to date.

Our other distribution activities, which are smaller in scale than those in the Netherlands and in Switzerland, those in Germany and in France and in Austria; generally are more resilient picture across those distribution activities, reflecting, I suppose, better economic backdrops and I think consumer confidence that is a lot better than it is in the Netherlands.

We have, in the Distribution portfolio, a growing business segment in sanitary heating and plumbing activities. The geographic footprint of that business is Belgium, Northern Germany and Switzerland, and here we had a much more resilient performance, with like-for-like profits ahead and also some good acquisition contributions in that particular business.

But overall, as you can see, a tough backdrop for Distribution in the first half of the year.

So looking then across the Atlantic, looking at our Americas business, good progress overall in this business in the first half of the year. Those of you who are familiar with CRH know that two elements of this business are particularly seasonal.

Our Materials business, profit's very much biased to the second half of the year, as is our Distribution profitability. The Products business is more balanced in terms of the profit generation in the first half and in the second half.

In Materials, I think we saw good volume growth across our three main Aggregates, Asphalt and Readymix products. In our construction paving activities, competitive pressures remain. I'll say a little bit more about that in a moment.

With the seasonality being more balanced in Products, it was the main driver of profit growth in the first half of the year and generally enjoyed good markets in the first half.

Distribution, I mentioned, is back-end weighted and probably even more so than in prior years because the big acquisition that we did last year in the Northern Plain states, its activity and profit levels are very skewed towards the second half of the year.

So, again, not much impact, as you'll see on a later slide, from acquisitions in terms of profit growth in the first half of the year. But, overall, good picture from our operations in the Americas in the first half of the year.

Looking then at the three business segments in a bit more detail. You can see on the current slide very strong volume growth on a heritage like-for-like basis; 8% in Aggregates, 6% in Asphalt, 7% in Readymix concrete in the first half of the year.

Now we saw much stronger growth rates in the first three months, obviously reflecting the favorable and benign early weather conditions, but they tend to be the lower activity months and [growth moderated] in May and June; but a good volume outturn here.

I think more particularly when you look at the slide, you can see good price development relative to unit costs, particularly on the Asphalt line, which I know is an area people tend to focus on.

Looking at the business by product segment, in Aggregates, we did have higher costs in aggregates because of the early start to the year involved a lot more early mobilization of quarrying activities and stripping costs, which added to our variable costs in the first half of the year, and some of that will come back to us in the second half.

So we did have a slight reduction in Aggregates' margins in the first half of the year, but our overall profitability in Aggregates was ahead in the first half because of the strong volume growth.

On the Asphalt side, again, we've mentioned in the release that we did face higher energy input costs in the first half of the year, but we were able to more than compensate for those with the level of price increase that we achieved in the first half. So, overall, our Asphalt margins expanded in the first half of the year.

In Readymix, again, we managed to deliver some margin expansion. However, the expansion in margin that we achieved in Asphalt and in Readymix was somewhat offset by continuing competitive pressures on the construction paving side. However, we are seeing some stabilization in the new work that's coming into backlogs in terms of margin, so, hopefully, that all goes well for the future, particularly into 2013.

So good backdrop, obviously, in the first half of the year in the Materials segment in the US.

Looking at Products, again the main driver of progress in the US in the first half of the year, sales up 10% in reported terms, up 9% like for like in dollars; some small acquisition effects in there.

The strongest segment of our Products business in the first half of the year was our Precast business. You can see there, like-for-like sales up 19%. Focused very much on utility construction where we have seen a resurgence of activity looking for our heavy designed concrete structures. And this was the other encouraging thing is that our backlog is also well ahead of the backlog at June of last year.

So a good first-half performance in Precast, and we see that continuing for the rest of the year.

Architectural Products is more residential and consumer related and, again, a good start here. You can see the like-for-like sales growth, up 6%. Very strong first quarter with the benign weather, and particularly as some of our homecenter customers stocked up for the main selling season. More moderate growth in the second quarter.

And our Building Envelope, our glass business, again, we saw good like-for-like sales trends in this particular business in the first half of the year. Two main elements to this particular business are Storefront, an architectural glass business, tends to focus on small jobs; remodeling of retail units, small scale commercial remodeling. Very strong revenue growth and profit growth in this particular business in the first half of the year, after some very quiet years.

On the other hand, our large project-related business, engineered glazing, which clads large structures, and which has sustained our Building Envelope business for the last number of years, has seen a lot of projects come to an end. And it's a much quieter work program at the moment. But, again, that offset our Storefront progress. However, we are seeing again the backlog beginning to build in this particular business, so I guess that's a positive as well to looking out.

So good delivery from Americas Products in the first half of the year.

The third leg of the business in the US, Distribution, as I mentioned, skewed very much in profit terms towards the back end of the year because, again, a lot of its activities are in the more Northern tier states. Our like-for-like sales here increased by about 5%; a significant acquisition impact in terms of sales contribution.

But, because of seasonality, particularly, as I mentioned, in some of those Northern Plain states, the profit, the EBITDA and the operating profit contribution in the first half tends to be low. Those businesses will deliver much more strongly in the second half of the year.

Two businesses, as you are aware, in our Distribution business in the Americas are Exterior Products, roofing and siding, where we saw like-for-like sales increase of 5%, and margins move ahead somewhat; and then our Interior business, which is geared more to ceilings, wall panels. And, again, a good like-for-like sales development here. This has been the more challenged of our two legs in Distribution in recent years, but we have seen good margin development in it in the first half of the year.

So an encouraging start as well in our Distribution business, and reflective of a good start overall for the American businesses.

So that's a quick run through on the segments in Europe and the Americas.

Just to put it all together on the next slide, before I hand over to Maeve to deal with some of the financial aspects, you can see, on this particular slide, the Group EBITDA margins for the first half of the year, as reported, compared with the first half of last year.

On the European side, as I mentioned earlier, the reported numbers are flattered in 2012 by the pension gain. If you strip those out, our EBITDA margin in Materials in Europe was similar, at just under 11%, to the first half of 2011.

On the other hand, for our Products business, as I mentioned earlier, it's penalized somewhat this year in terms of margin comparison by the absence of last year's pension gain. So, again, if you strip those out, Products margin 7.2% versus 7.7%.

Distribution in Europe, obviously no particularly one-off effects influencing the margin development there, which is tough.

And you can see margins ahead in all three business segments in the Americas; with the strongest progress, as I mentioned, in Products.

So against that backdrop, obviously, the overall Group margin declined somewhat in the first half of the year. And in the first half, the European operations have a greater weighting in profitability, obviously, than the Americas operations.

But what's clear from this is that there are, obviously, pressures and challenges in our European business. And we have been very active, as you all well know, over recent years in addressing and responding to the difficult situation in our markets in terms of cost reduction.

The cost takeout that we've achieved over the last five years in Europe is a accumulative EUR1 billion; roughly half of the overall Group program on the cost side.

And we have responded again to the evolving circumstances that we've seen thus far in 2012 with some further restructuring measures in the first half of the year.

And we're focusing -- as we look now at the evolving GDP outlook for Europe, we're continuing to focus and look deeper into our cost base; looking for further operational efficiencies, looking for opportunities to increase our commercial positioning through more effective pricing in response to the margin pressures that we're facing at the moment.

And also, particularly in areas where we have seen some significant volumes declines, leveraging our procurement capacity and seeking better purchasing buys across the business.

So a lot of initiatives going on currently in the European sphere as we respond to the trends that we've seen in the first half of the year; and assessing the scale of the additional actions that will be needed as we get a better sense, over the coming months, of the likely evolution in European GDP growth for this year as a whole, but also, more particularly, looking out into 2013 and into 2014.

So that's an overview of the operational side of the business for the first half of the year. I'll hand over to Maeve now just to highlight some financial aspects, and then I'll come back to wrap up with outlook, before we launch into the question-and-answer session.

So, Maeve, over to you.

Thanks, Myles, and good morning, everybody. I've got just four slides to deal with today; two on the income statement, and two on my favorite subject of the cash flows.

So, first of all, the income statement. Myles went through the details trading performance by segment, so what I've put up here is the key trading numbers for the Group as a whole, just to summarize them.

As Myles said, sales for the period, at EUR8.6 billion, were 5% ahead of last year. That reflected the benefit of a significant translation impact. Underlying like-for-like sales reflected a net 1% increase, which was a 2% increase in the first quarter and a slowing down to a minus 1% change in the second quarter; giving an overall 1% like-for-like improvement in sales.

On the EBITDA and operating profit line, we've seen the results very much in line with the guidance which we gave in May, and also similar to last year's number.

You heard Myles talking about Europe Materials and Europe Products about some big pension movement numbers; when you get to the Group as a whole, they even out. The net effect for CRH overall, half on half, is actually fairly flat in respect of pensions. So the overall effect, the outturn, very much in line with last year.

My next slide shows the effect on the key non-trading income statement items. The first line item there, a significant profit on disposal, compared with last year.

The main item in that reflects the satisfactory outcome from our arbitration proceedings with our joint venture partner, Semapa, which resulted in May in the buyout by Semapa of our 49% stake in the Secil business in Portugal. A good outturn in terms of profit, and also good cash flow, which we'll see on the next slide.

On the Associates line, we've seen a big change also in our numbers. The factor there is, primarily, an impairment charge which we've taken in respect of our Uniland business in Spain. We've a 26% stake in that business.

Recent months have seen a significant deterioration in the underlying market conditions in Spain. We've seen the outlook for construction activity deteriorating, and also that business itself has announced some restructuring and rationalization costs.

So the net effect of all of that caused us to look at taking an impairment charge, and the net result of that was EUR130 million of impairment charges reported on the Associate line.

Those two big moving parts gave a net EUR47 million benefit to our profits, partly offset by slightly higher finance costs, which reflect that benefit on exchange, which helped our sales number, has also had an increasing effect on our finance charges also. So that, together with the bonds which we raised earlier in the year, has given a net increase of EUR25 million on our finance charges.

So the net improvement in our profit before tax is still significant at 23%. Earnings per share also up 35%.

And with those strong outturns, as Myles said at the beginning of his presentation, we've maintained our dividend for the interim at EUR0.185.

Now onto cash flows. This slide here shows the moving parts that support Myles' earlier comment that our net operating cash outflow for the half year has shown a good improvement; from about EUR1 billion this time last year to EUR909 million this year.

You can see here, from those moving parts, that the big change is on the working capital side. And what this is a result of is the continuing focus that CRH has maintained on working capital management throughout the last number of years, and particularly in the last number of months. So we're very happy with that working capital outcome.

Obviously, a big outflow this time of the year, as the business gets into the -- is in the busy season at the moment. But the fact that it's significantly lower than last year, we think, is a good positive.

You'll see our capital expenditure figure also is being maintained and kept well below our depreciation charge. It's showing an increase on last year. There's an exchange impact also in that capital expenditure number. If you exclude the exchange impact, capital expenditure was very similar to last year's number.

So that net improvement in cash outflow translates for the Group as a whole into an overall maintenance of period-end net debt which is a little bit below last year.

As you can see, we've spent a little bit more on acquisitions, so a little bit of a pickup in our acquisition activity. That EUR256 million in the first half of this year reflects a total of 18 transactions around our business.

So the net impact -- we've also seen the good improvement on disposals. That's primarily, as I said earlier, the proceeds from our disposal in Secil, but also the disposal of an access controls business based in Germany, which we sold in April. So some good cash generation there.

The exchange impact here has had a significant impact when you compare the EUR3.9 billion at the end of June 2012 with the figure at the end of June last year. At the end of June last year, the exchange rate versus the dollar was about $1.44/$1.45 to EUR1; it's now, at the end of June this year, was around $1.26.

So that's had a significant adverse affect on our reported net debt number, which includes a significant element of dollars in there. So if you stripped out that exchange impact compared with June of last year, our net debt actually reduced by EUR370 million. So we think that's a positive outcome for the half year.

So, with that, I will hand you back to Myles.

Great. Thanks, Maeve. I think interesting there to look at the continued focus that the Group has on cash flow, and particularly you see a good working capital outflow experienced in the first half of the year; an improvement versus the first half of 2011.

Looking at the outlook for the remainder of the year, I think it's pretty clear from the results that we have seen from the sector over recent weeks, and, indeed, from our own results this morning, that the continuing problems in the eurozone are increasingly weighing on the wider European economy, and leading to an erosion of business sentiment and, indeed, of consumer sentiment across Europe.

In this context, as we look at the second half of the year, we do hope for a clearer response from the authorities in the autumn to the eurozone issues. But I think, at this stage, it would be optimistic to assume that that will have any positive impact on underlying demand in the second half of the year. And, accordingly, our guidance in our outlook statement today is that we expect that our like-for-like sales in Europe in the second half of the year would show a somewhat greater decline than the 5% decline that we have seen in the first half of the year.

But, as I've already mentioned, we are responding to that very actively across our business with additional cost-reduction measures to deal with some of those emerging trends that we have seen in the first half of the year.

Looking at the Americas, it's clear also from the presentation, and, indeed, from others who have reported already, that it has been a half year of pretty good progress in our American operations. But I think it is also clear from recent trends that some of the good early weather has pulled forward some demand from later in the year.

And also the strong economic growth that we saw in terms of quarter-on-quarter statistics in the US in the first part of the year have begun to soften slightly. But we do expect overall economic growth to be satisfactory in the US for the year as a whole.

But against the backdrop of the pull forward, and the slightly slower pace of growth, we do expect that the like-for-like growth in dollar terms that we see in our US operations in the second half of the year will not be on a par with the strong 8% that we saw for the first half.

So looking at that in overall, and also taking into account the fact that we are implementing additional restructuring measures in our European operations, which will result in higher-than-expected restructuring costs in the second half of the year, we expect that, with the benefits of some exchange translation, and, obviously, subject to no major shocks on the economic or energy front, that our EBITDA outcome for the year as a whole will be similar to last year's level.

So with continuing challenges in the business, we continue to look to improve our performance on a number of areas. And it's very much the work that we have been doing over the last four years to five years; continuing to look for additional efficiencies on our cost base; looking at sharpening our commercial focus to resist and to overcome some of the margin pressures that we see in the business; looking, as Maeve has outlined, to continue to deliver strong cash generation across the business; carefully managing our capital expenditure in each of our business segments and adapting it to the demand environment that we see out there.

Also focusing very much on working capital, managing our inventory as well, managing our receivables particularly well, and avoiding undue credit risk; all aimed at maintaining the very strong and flexible balance sheet that we have and which gives us the ability to embrace suitable development opportunities across our business.

And, as Maeve has mentioned, we have seen a higher level of spend in the first half of 2012. And we are seeing a good range of development opportunities across our business. And our balance sheet does enable us to take advantage of that.

So, with that, we come to the end of the formal presentation and it's time to move in to the question-and-answer session.

As I mentioned at the start, we will structure it in to three blocks; dealing first with questions relating to our European activities, then moving on to the American activities, and then coming back to any sort of Group-related matters.

We will deal first of all in each of those blocks with questions from the floor here. And then we will move to questions which come in via conference call.

I think for those of you coming in via conference call there will be plenty of time for questions and answers. So you will have the opportunity to come back with subsequent questions in relation to the Americas and to Group issues. But I would ask you, as you come in, to initially confine your questions to our European businesses.

So I think that will lead to a more productive overall conversation and dialog between yourselves and ourselves.

So with that, I'll sit down and we'll launch in to the question taking, first of all, questions from the floor here in Dublin in relation to our European activities. I might ask you to state your name and the institution you represent in posing those questions. Thank you.

Barry Dixon from Davy. Myles, you've mentioned in terms that the declining outlook for Europe in the second half, would you mind just going through some of the main markets, particularly places like Poland where you had a very good first-half performance, particularly relative to the market; Switzerland, where I suppose the 13% decline in cement volumes was disappointing I suppose, and maybe your thoughts on that going in to the Swiss market, particularly in the second half, and also maybe in the context of the Distribution business there.

And then also Benelux, which is clearly a very important market for you in terms of your thought process there in terms of like for likes in the second half in that market.

A second question is really in terms of, can you give us any sense as to the scale of the restructuring, or the cost-cutting program that you expect to implement in the European operations in the second half of this year or in to 2013, and what those might cost. Thank you.

Albert will deal with the restructuring. First of all maybe I might address your questions in relation to the trends in Poland, Switzerland and in the Benelux.

Starting, I guess, with the Benelux, you've seen there in the presentation I referred to the fact that we saw like-for-like sales declines of about 5% in our Products business in Europe, and about 7% in Distribution.

The actual declines in the Netherlands in the first half of the year would have been somewhat higher than that, reflecting, I think, a sharp cut back in public expenditure, and also in private expenditure on construction in the Netherlands.

I think the lack of stable government there, the fact that the elections are coming up in September again, I think concerns about the treatment and deductibility of mortgage interest is having its impact on the market, while the general back drop in the eurozone is contributing to an even thriftier-than-usual attitude on the part of the Dutch consumer, which is coming through in our DIY and on our builders' merchanting side.

So I think we wouldn't expect to see anything that's necessarily going to change that in the second half of the year. So I think it's going to continue to be a tough outlook in the Netherlands in the second half of the year. And we are taking action to respond to that.

With regard to the Polish and Swiss market, in relation to the Polish market, as I mentioned, the overall market is down about 10% in the first half of the year. Our own volumes are down 2%, which is a very good performance, as I mentioned, reflecting good commercial action. And also we would have to say better activity in our market areas than in some other market areas, which are represented by other players.

The general expectation, I think, is that the Swiss market will soften further in the second half of the year. I think that has been evident from recent statements from industry bodies and from other players in Poland.

We would expect to see some of that in our market areas as well. But I think we would expect to do, just as we've done better than the overall market, considerably better than the overall market in the first half of the year, we would expect to do better as well for the year as a whole. But I think full year, the market will be down more than 10% in Poland.

In Switzerland, both our Materials and our Distribution activities were hit by a very, very, cold snap in Switzerland in the first quarter. An indication of that would be that at the end of the first quarter our Cement sales were down 25%. Since then they have traded very broadly a couple of percent behind the equivalent period last year. And we would expect that trend to continue for the rest of the year.

So while the overall volume of activity will be down in Cement for the year as a whole, we think it will continue to moderate as we move through the year for our activities.

Our Distribution activities in Switzerland were hit by the weather in the early part. Also some competitive pressures arising, particularly in border areas, for our Distribution activities where people can point to cheaper prices in Germany and France or in Italy, because of the strength of the Swiss franc in terms of their purchasing power.

We've responded to that in our business. And I think we have seen a better trend in our Swiss Distribution activities through the second quarter, and in to the third quarter.

So I think the underlying dynamic in the Swiss economy overall is positive. And we would expect a better second half in Switzerland.

So I hope that deals with your particular questions there, Barry. On the restructuring side, Albert, I'd ask you to comment on that.

With our results we announced earlier this year, we indicated a cost-savings target for this full year and the costs associated with that. What we've seen in quarter two, obviously with the further declines, and we've indicated this morning that we will have further costs, above and beyond that, as we push out those cost savings. And we will see an increase in those cost savings during the course of this year.

But, as Myles said in his presentation, what we are doing is we're assessing exactly the extent of what those savings will be.

We've a number of plans across all our European divisions and we really want to see how the summer rolls out before we can make a full judgment as to what is the appropriate level of initiatives we must roll out. So we'll come back later on this year about it. They will be up, but the full extent of them won't become clear to us, and to the market, until we see exactly how the season evolves.

Have we any other questions on Europe on the floor here?

Gerard Moore from Merrion Capital. Just two questions, please. First of all within Europe Materials, could you quantify the additional contribution that you got from your Ukraine business in the period? And how big a contribution you'd expect that to achieve in the second half of the year?

And secondly within the statement I think you talked about margin pressure within the Building Products division. If I understand correctly I think it was coming mainly from Germany. If that's the case, could you just give us a bit more detail about that, and, likewise, how you see that panning out for the rest of the year? Thank you.

Two questions there. We indicated, in relation to the Ukraine, that we anticipated that the full-year savings, as a result of the commissioning of our new kiln, would be of the order of EUR30 million. And I think the run rate in the half year has been in line with that.

For the year as a whole we are seeing a softening of demand in the Ukraine in terms of total cement consumption. So we'll just have to see how that softening develops over the remaining months of the year. But if it is weaker than our earlier expectations, obviously it would have implications for the full-year contribution that we indicated back in February from the Ukrainian development, if you like.

But, for the first half of the year, the benefits have been running in line with our earlier expectations in Ukraine.

With regard to our Building Products division, I think just with a slower demand backdrop in Europe in the first half in fencing, in construction accessories particularly, we have seen more competitive pressure, more push back on some of our pricing initiatives, and that would be the margin pressure that I referred to in the presentation.

We're responding to that, but I think some of those margin pressures are likely to continue through the second half of the year, just given the overall outlook for eurozone GDP.

Just earlier this morning we have had the German second quarter numbers. While they're slightly ahead of expectation, they are showing a slowing in the pace of GDP growth, compared to the first quarter of the year. And I think we will have the eurozone-wide GDP numbers coming out later this morning, which will be interesting to look at in terms of getting a sense of how the overall eurozone is coping.

So I think that's probably going to mean that some of those pressures will continue through the second half.

I think we seem to have exhausted the questions here on the floor in Dublin in relation to our European operation, so maybe I'll go to the calls that are queued up on conference call facility. So, again, I'd ask you to quote your name when posing your question. Thank you.

Thank you. (Operator Instructions). Paul Roger, Exane BNP Paribas.

Just a couple of questions from me. The first one is quite general and it's really about your guidance for the second half in Europe.

I suppose I'm just a little bit surprised that it is quite so bearish. Obviously the first half you had the impact of the bad weather at the start of the year, I would have thought you benefited a bit more in the second half from better pricing as well.

I just wonder whether you can comment a bit more about whether that's base effect or is it your macroeconomic view? Or does it reflect something you've seen in July?

Maybe linked to that, if you could talk a bit more about the trends you have seen in the different countries in July, that would be useful as well.

And then the second one is on European Materials. Can you comment a bit about the outlook for price and cost in the second half? Do you plan any further price rises? And to what extent could energy costs become a tailwind in that business in the second half?

I'll ask Albert to deal with the price-cost equation on the Europe Materials side. If I could just make some comments in relation to the overall guidance for Europe, for the second half of the year.

You're quite right; we did have a very severe first quarter weather pattern in Europe, which did have an influence. But I think you'll remember that we had a very favorable finish to the year weather-wise in November and December in Europe last year, which probably is unlikely to be repeated -- it may well be, but we don't know. But we're assuming a normal sort of seasonal pattern as we wind down in the latter months of the year.

So we're taking that into account in our second-half European like-for-like sales guidance.

I think we also -- I don't think there's anything improving on the general economic backdrop in Europe. You've seen it again, as I mentioned, in those German GDP figures this morning. You're seeing continuing uncertainty with regard to the eurozone.

We're all waiting to see what happens in relation to a policy response in September. But as I mentioned in my presentation, I think it's unlikely that anything that comes out of that, even if it is very positive, it's unlikely to have much effect in the remaining months of the year.

So I think, given what we've seen in the first half, in the second quarter we are taking a cautious outlook, in relation to Europe, for the second half of the year.

I think I've indicated as well that for -- in responding to one of the questions from the floor here in Dublin, that we would also expect that the very good performance that we've had in our Polish cement market in the first half of the year, limiting the decline in volume to 2%, that, with the overall market continuing to weaken, we probably will see that that increase -- or that decrease in pickup to show a higher, if you like, percentage decrease for the second half of the year.

So that would also be embedded in our guidance for overall Europe for the second half of the year.

And just a quick follow up on that, Myles. If you look at the volume versus price trend in the first half, when you make similar comments for the second half, do you expect a similar split between price and volumes, I mean, i.e., is all the weakness coming on the volume side? Or does the slightly weaker market mean that your pricing might also come under some pressure?

My general sense of it would be is that pricing will probably hold broadly for the second half of the year, but probably a bit more downside on the volume side. Albert, would you care to add to that?

Yes, I think that answers really in some way your question about potential for price changes in the Europe Materials division in the second half of the year.

I think against the volume backdrop that we're seeing, I think it's unlikely that we will see any changes to pricing in the second half of the year. I think they're set now at this stage. We're sitting here today in the middle of August, so I think it's more or less done [and dusted] with regard to pricing.

With regard to the second part of your question, Paul, with the falling energy prices, will we see some tailwinds there with regard to energy costs?

We obviously would buy ahead and hedge against price movements. So for 2012 our energy prices are really set at the half-year stage, so any benefits in lower energy costs really be felt in 2013, rather than 2012.

Okay. So just to summarize then, for basically European Materials you would expect some more gross margin pressure in the second half. Or will you get a bit of a benefit because of the price rise you've already put through in terms of the sequence year on year?

I think we should get some benefits on that front. I think we will obviously be continuing with our cost-reduction efforts. We will have further benefits from Ukraine.

I think it very much boils down to what is the sort of volume pattern by individual markets. Obviously don't have full clarity on that. But our overall sense should be that the top line sales for Europe Materials, which were relatively flat in the first half of the year, will probably be showing some slippage in the second half.

Okay, that's very clear. Thank you.

Ian Osburn, ING.

Just a question, full-year numbers, you guided that you expected European Products margin in 2012 to be higher year on year. I think that was, Albert, something that you said. I just wondered if that was still the case, or if the declines we've seen in the first half mean that you've revised that.

Also, Myles, from your introduction, you talk -- am I right that you're sounding more positive on 2013 than you are in the second half of this year? Or did I pick up that incorrectly?

And also we've seen the diesel prices and energy prices generally come off throughout the second half, but start going back up again in the -- sorry, in the second quarter, but start going back up again in the third quarter. Do you expect to see any benefit from that dip? Or have you stayed hedged all the way through? Thanks.

I think on Product margins, Ian, thank you for the questions there, we would expect to see Product margins decline for the year as a whole. I think we've seen a first-half decline, and, given our outlook for top line in Europe, we would not see that being reversed in the second half of the year.

Hopefully, though, we will see some benefits from some of the cost-reduction measures which will temper the decline. And I just point out again, just when you're looking at those, obviously make sure you adjust for the pension aspect which we highlighted in our statement and in the presentation.

With regard to 2013, I think my comments there were related to the fact that any policy response that we get in September from the EU authorities and the ECB, I think if they are positive, if they are more sustained in [calming] markets than they have been to date, I think inevitably the impact of that in 2012 will be limited.

And so that was the point I was making in relation to anything that may come out of their deliberations, that the impacts will not be particularly felt in 2012, if they are, indeed, positive.

Sorry, Myles, to interrupt, just to follow up, so are you hoping for some stimulus measures that might actually come through into construction?

Well, I think that's one of the things that has been mooted, but there are as many proposals as there are countries in the eurozone, and I think we have to wait and see just what comes out of the particular deliberations.

There is a lot of expectation once again around that. History tells us, and the history of the last few years tells us, we should be cautious with regard to expectations. And that is what we are doing.

Your other point, I think, in relation to diesel costs, yes, certainly in the wider Group we have seen some benefits in terms of our regular purchasing. Our diesel prices would still be a bit below where they were this time last year. And, again, a lot depends on the trends in energy markets over the remaining months of the year.

And if they stay where they are, which I think they're heading back towards peak, that would have -- presumably it would just be a further headwind to --.

Well I think that they have -- the development in diesel costs this year has been better than we would have expected in February. So we are seeing some benefits from that. But diesel is one of the lesser components of our overall energy mix.

More significant for us are the fuels that we buy for our Cement business, which, as Albert mentioned earlier, are largely committed in the back end of the prior year. So our purchases in the final quarter this year will reflect the changes since last year, but doesn't impact significantly on our big energy bill in Europe.

And our liquid Asphalt obviously is another issue which we'll come to when we, I'm sure, when we open the questions to the American side of the business.

That's great. Thank you very much, Myles.

William Morgan, Goldman Sachs.

I just had three questions. The first one, on Poland, and also to some extent the Ukraine, you are sounding more cautious about the second half. I just wondered, what is mainly causing that?

Obviously the ending of the European Championships is something that's been known for some time, so is it that you're seeing greater signs of austerity in those countries? I just wondered if you could elaborate a little bit on that.

The second question is some of your peers around Eastern Europe, parts of Germany and Austria, have been talking about incremental pricing pressure in Materials. I just wondered if you could talk a little bit about whether or not you see some kind of incremental pressure there and maybe just give a little bit of color on the European pricing by country.

And the final question, just to press you on an answer you gave to a previous question about the trends seen in July, you were answering that question, basing it quite a lot on macro data. And I just wondered, in terms of pushing it more bottom up, in terms of what you're actually seeing from the divisions, is that broadly reflective of the macro data or do you not have visibility there yet? Thank you.

It's broadly reflective of the macro data. One of the issues, particularly in relation to our Products and Distribution activities in Europe, is that July and August, as you're well aware, tend to be big vacation months in Europe. So you have construction activity in countries shutting down for extended periods through those two months. So it's very hard to get a clear read based simply on those two months.

But from our experience in the second quarter, also from the macro trends, and from the limited, if you like, reliability we put on July/August trends, that leads us to be more cautious with regard to like-for-like sales trends for Europe in the second half of the year.

In relation to the volume outlook, Poland and the Ukraine and some of the pricing trends there, Albert, you're familiar with that area so I'll hand that to you.

Let me just go through the volume outlooks for Poland and Ukraine first. With regard to Ukraine, as Myles said, we had a good first half of the year, but we're starting to see some softening coming into the market as we go through the summer and into the second half of the year.

It is a year of parliamentary elections in Ukraine. History would tell us that there is always, as we lead up to those elections and immediately after those elections, there's a level of uncertainty and that causes a falloff in construction. So I think that's going to come through in our volumes in the second half of the year in Ukraine.

With regard to Poland, there's a number of factors coming through. It's not necessarily austerity; it's really pushing up against the fact that the government-funded construction in Poland is about 60% of total construction spend and they are pushing right up against the ceiling which they are allowed to increase the funding for publically-funded construction.

That, combined with the fact that there are a number of large road jobs that are coming to an end or have run into some difficulties, I think those two factors combined will moderate somewhat the volume loss we're seeing in Poland in the second half of the year.

With regard to pricing in the major markets that we're involved in, I think pricing in our major markets, such as Finland and Switzerland, will be stable. We don't see any further prospect for decline; not at this moment of time anyhow.

In Poland also, I think the Cement pricing will be solid. There may be some slippage, as volumes come off in the downstream products in the second half of the year, but that remains to be seen. I think Ukraine will be fairly solid with regard to pricing as well, even though the volumes may moderate somewhat. And with Ireland and Spain; very difficult markets. Prices are down in both of those markets anyhow, but we don't expect a further decline in the second half of the year.

I hope that answers your various questions, Will?

That's very clear, thank you.

Robert Eason, Goodbody Stockbrokers.

Just in relation to your CO2 allowances, what's your expectation for the full year, and can you just remind us what it was last year?

And the second question is in relation to the divestments. Can you just give us an indication of what is the annualization effect of those divestments?

And my third question is in relation to China. Cement volume is very weak there in the region in which you operate. Can you just give us a bit more color on that and how you see that developing in the second half of the year, and into next year, especially in the context of CRH potentially exercising their option to increase their stake there?

And can you just remind us the timing of that exercise of the option? Thank you.

Albert, you might respond on China, and then I'll ask Maeve to deal with CO2 and with the impact of the divestments.

With regard to the cement volumes in China that we've announced this morning, that 20% decline, this really is in line with what we're generally seeing across all the markets in China. It is quite difficult sometimes to dig into what the statistics are produced with regard to cement volumes in China because they are production statistics that are produced; not sales. And, of course, we're quoting sales volumes.

But what we have done is we've made a conscious decision in our marketplace to maintain our pricing in the marketplace, and, in doing so, we've stepped back from some lower value/higher volume contracts. But, in doing so, we've managed, as I say, to maintain our price, and that has helped our overall profitability.

So we're not surprised. We're seeing it's a cross-China phenomenon as the Government pulls back from infrastructure projects and from subsidies and from funding major stimulus packages.

We think that this is also tied into the change in the political environment there in the fall of this year, and I think that when that change takes place, we would expect in 2013 further stimulus packages to come back into the marketplace.

With regards to your comment in terms of our option to increase our stake, that option kicks in in January 2013 and it lasts for three years.

When we invest in developing markets, as we have done for the last 20 years in CRH, we do so fully in the knowledge that emerging markets ebb and flow. Over time, they grow, but it's not a straight line. And we're not surprised that we're seeing this in China. We will see it again. We will see periods of very strong growth and you'll see periods of decline. That's emerging markets for you and that's why you need to be cautious in the level of investment you commit to these markets.

But we believe China is long term, it would be a good place for us to do business, and I think if it makes sense for us to step up with our investment, we'll do so regardless of what we're seeing this year.

Thanks, Albert. Maeve, two questions from Robert there; one in relation to full-year CO2 trading benefits and the other in relation to divestments and their impact. I guess, Robert, your question was, what would the impact be in the current year?

Yes, just in terms of the annualization as you go into the second half of this year.

If I deal with the second question first, Robert. You've seen there was -- the sales impact for the divestments in the first half of the year was EUR192 million. We'd expect there's probably another EUR100 million of sales to come out for the full year, so in the order of -- sorry EUR200 million, so in the order of EUR380 million or so for the year as a whole.

On the CO2 side, for the half year, there was about EUR23 million of gains on CO2 trading in the first half of the year, which was broadly similar to last year. The year as a whole last year had EUR38 million of CO2 sales.

We would expect the second half of the year to be running significantly lower than we had overall. At the beginning of the year, we thought the overall CO2 would probably be -- was going to be lower anyway than 2011. So there's probably another maybe high-single-digit millions of income to come through for the second half. So it's likely to be lower for the full year.

That's great. And sorry, just one follow-up question just in terms of your development opportunities in Europe and acquisitions. Just given the market backdrop that you're painting for Europe, does this mean that you will pull back from that sort of activity, just given the uncertainty?

It depends very much, Robert, on the opportunity and depends very much on the market. I think we have a number of things in train at the moment in Europe which may come to fruition in the second half of the year. So we are not, if you like, saying Europe is a no-go area in terms of development. We're still following a number of opportunities in Europe and would intend to continue to do so.

But I think, like everything, it comes back to valuation and the valuation must reflect the current trading environment, and, indeed, the prospects for the next couple of years. And that has been, I suppose, the area where we have found challenges, if you like, in persuading people to part with their businesses at valuations that makes sense for us.

But we continue to make progress, as Maeve pointed out. Our actual deal completion in the first half of the year has been higher than it would have been in the first half of last year and we continue to pursue opportunities.

Thank you.

I'm conscious that time is passing and we have devoted a considerable period of time to Europe. If there are remaining European questions outstanding, we can revert to people outside of this call. But I think probably we should, at this stage, move on to cover our Americas operations, given their scale and given that time is passing and we're at around 9.30 and would like to wrap up by 10.

So maybe on the Americas, I would start with some questions here from the hall in Dublin. And then we will go to the conference call questions on the Americas. So, again, over to the room here in Dublin.

Barry Dixon from Davy. Two questions. Looking at the Products and Distribution, there seems to have been a fairly reasonable slowdown or moderation in growth rates in May and June from the first four months of the year. And it looks like that May and June, like-for-like sales would be up maybe 3%, 4%. Is that the kind of scale of like-for-likes that we should be looking at in the second half of the year? Or should it be a bit better than that?

Secondly, in terms of -- you mentioned, Myles, in your presentation the improvement in the backlog on paving jobs. You might just give us a sense around that as to whether you think that's MAP-21 related or how the whole funding structure is looking, both from a federal level and a state level.

And would you expect to see that the increased confidence amongst state DoTs feed through into higher volumes on the infrastructure side in 2013? Thank you.

I think your indication there in relation to the sales levels in Products and the growth in Products in May/June is probably more indicative of what we might expect for the second half of the year.

And, as we said in our guidance today, we had a very good 8% like-for-like sales growth in the Americas in the first half. We expect the second half to be well below that. So I think May/June, as you indicate there, is probably a better level of what we would expect for the second half.

With regard to backlog in our Materials business, what I mentioned in the presentation was that we have seen some stabilization in the margin in backlog.

Now, again, it's early, it's, if you like, the first indicator that, again, with some of the strength coming through on the private side that, as we would have said over the last couple of years, we would expect if that came back, it would help to relieve some of those competitive pressures. There are some early indications of that, but, I think, probably, they won't be feeding through until next year. But it's the first time we've seen that for quite a while.

In relation to the MAP-21, I think it is a positive development in relation to 2013 and 2014. I think one of the big concerns for the industry was that, with the success of six-month type of extensions that we were getting to highway funding, that we faced the prospect of renegotiation of a further extension in the aftermath of the presidential election, and in a very fraught, maybe political, environment that that election may contribute to.

I think with the MAP-21 proposal, which secures highway funding out to September 2014, I think that risk is off the table, so it's a positive for 2013 and 2014, and, hopefully, it's also encouraging for state DoTs.

I think it still, though, is a shorter-than-usual highway commitment. We have been used to six-year programs. It does probably mean that states will continue to focus more on shorter term, smaller-scale projects, which, again, if you like, benefits us more with our focus on short-term resurfacing and repair work rather than on big, if you like, new highway extensions-type of activity. So I think it's a positive for '13/'14.

Gerard Moore from Merrion. Just one quick question in terms of pricing for the second half of the year. Could you give us an indication as to the pricing trends that you'd expect? And will those pricing trends be strong enough to drive margin enhancement, or would you expect that mainly to continue to come from operational leverage?

I think the pricing trends have been pretty solid through the last couple of months. I think they -- we would continue to expect that we will deliver good Asphalt price increases and maintain margins, and improve them slightly in that for the year as a whole.

I think we have shown in the first half good margin trends in relation to Readymix.

Aggregates, as I mentioned, our cost per unit was up in excess of our sales price in the first half of the year. We would expect to see some improvement in our sales price comparisons through the second half. And also some moderation in our input costs, so hopefully seeing margins come back into balance in that particular business.

So we don't see, at the moment, any significant change in terms of price evolution compared to the first half of the year.

I think we might move to the Americas-related questions from the conference call.

Thank you. (Operator Instructions). Yuri Serov, Morgan Stanley.

Two probably pretty quick technical questions on Americas Materials. You're showing prices in Asphalt and you're talking about prices in Asphalt being quite strong. This goes against what we've heard from your, admittedly smaller, competitors. Could you please comment on that? Why would you be delivering better prices and what's the whole market looking like?

And secondly on Readymix, you're showing your variable cost change at zero compared to last year. On the other hand, we've obviously heard about cement price increases. Also, could you please explain how that works? Thanks.

Two questions, there. I think -- I suppose there is one obvious answer to why are we doing better on pricing than some of our competitors, but I won't give that.

I think it is probably reflective. We are a much bigger player on Asphalt than anybody else in the market. We are the largest player in US in Asphalt. So other smaller players can have particular regional characteristics in their business, and it also may not be the focus for them that it is for us as well

So all we can say is that we have done well on our pricing in Asphalt. It has been a particular focus for us, obviously with the input cost pressures that we've seen over recent years. And it is what it is and we would expect, as I say, the pricing to continue to show that level of increase as we move through the second half of the year.

On the Readymix side, we have had raw material input cost increases on the Readymix side. But we have been able to offset those through efficiency measures, particularly in relation to mix design and efficiency on that particular front. And also, more effective, logistical effort on our Readymix side. So I think that has been the offset to higher raw material costs in concrete.

So, hopefully, that answers your question, Yuri, and we can move onto the next call.

Thank you.

John Messenger, Redburn Partners.

Actually my questions had been around Europe, but if I can just pose it here anyway because it covers the US as well. It was just around, obviously, initiatives on cost cutting.

Up to date, 40% of the cost cutting has been, obviously, around permanent cost saves. Just thinking about how the world is changing, both -- more in the -- in Europe than the US, Myles, so apologies if this is coming later in the Q&A session.

But do you expect that you are going to have to fundamentally address more around fixed costs, and that that permanent cost component will increase as in, is this, again, now going to be more about permanent facility changes in terms of the backdrop for volumes?

Apologies, it's more back to Europe but it does apply, I guess, a little bit into the US as well in terms of just the scale of recovery, how quickly that's coming? And do you, therefore, believe that some of the cost cutting is now going to have to become more fundamental around capacity that you're sitting with, with a view about where the world will be one, two and five years from now?

I think we will cut you some slack on this particular one and respond to it, but I think we have to really leave time for the Americas in subsequent questions.

I think there have been very significant permanent cost reductions in our European operations over the last four years. It hasn't all been on the variable side. We have had significant restructuring and collapsing of organization structures, and, indeed, permanent closures across some of our operational networks.

Albert, you've been very much involved with that; maybe you'd like to pick it up from here?

Yes, very much following the volume trends, John, and actually trying to stay ahead of the volume trends across all our businesses. And you're right to say as the extent of the downturn becomes more permanent to the new world that we live in, you look to fundamentally restructure your back offices and also your capacity.

I think really what we said -- when Myles did his presentation, he said we're assessing the necessary reactions that we need to take during the course of the summer. Really, it's trying to get a sense of where we will be as we exit the season of 2012, looking at 2013, to see exactly how much work and how much further restructuring that we need to do.

We have done a lot of cost takeout on the fixed cost side. As you indicated, about 40% of our savings do come from the -- are permanent and major, have come out of fixed overheads.

But if we take the view that this is now the new world that we're living in, we're looking at a three- to five-year downturn, if you're talking about Europe, and then that would necessitate us getting into our fixed costs and getting into our actual capacity and overheads.

So I think that's what we will be looking at during the remainder of this year, and we will come back and talk to you about it later in the year.

Great. Thanks very much.

If I can get the train back on track with regard to the US now with the calls from the conference line.

Clyde Lewis, Citi.

Two from me, please. One just in terms of the pipeline for US deals, if you can update us there, Myles.

And the second one was on slide 27, where you break out the organic moves within the Americas Products division. I was surprised the EBITDA increase wasn't bigger, given EUR114 million of turnover gains. Could you maybe help out a little bit in explaining why that gain wasn't bigger?

I think just on that point, your second point there, Clyde, I think in the US, we are seeing volumes picking up. But I think the pricing evolution on the Products side still isn't motoring in the way we would like it to be. And I think it needs some further volume growth before that can kick in.

And obviously, we do have in the -- in our Products business there is a significant concrete products weight in there as well. And we have seen -- well, we've been effective in counteracting it in our readymixes and some of our heavy concrete products business. And, indeed, some of our masonry and landscaping concrete products businesses haven't had, if you like, the strength and pricing that we would be seeking to generate over the next 12 months or so in that particular Products business.

Okay. So it's mainly APG and recovery of costs.

Yes.

Okay. Thank you.

In relation to deal flow in the US, I think we are seeing quite a lot of opportunity coming through in the US.

I think one of the characteristics of the deal flow has been that, while we have, through a tough period, continued to generate some good deals on the Materials side particularly reserve-backed assets, we have been pretty quiet through '09, '10 and '11 on the Products side. But we have seen, over the last six months or so, some growth in the opportunities in the Products area.

We've completed some acquisitions in the first half in the Products area. We are pursuing some further opportunities at the moment. So I think, as the private side recovers in the US, that is an area where, hopefully, we'll find some buys, if you like, that meet our valuation criteria.

But it is still a challenge, as I mentioned earlier, in terms of balancing that risk-reward equation on the deal side. But I think there is more opportunity out there.

Myles, can I ask a follow up in terms of the shape of the portfolio you'd expect to develop in the US over the next couple of years? Have your thoughts changed on that at all?

No, not at all. I think we still believe in the balance in the business between the heavy side and the Products and the Distribution side. And we'll be looking at opportunities in all three segments.

Okay, thanks very much.

Howard Seymour, Numis Securities.

Sorry, it was a question on Europe from before that I was just hanging on, so I'll leave it at that because that was answered. Thank you.

Sheenagh Matthews, Bloomberg. (technical difficulty)

We seem to have maybe some crossed line there. Can we try again on that question?

No. Are there any more questions in relation to US on conference line?

Gregor Kuglitsch, UBS.

I had two questions. The first one was just on the US Materials, maybe more on the volume side, because obviously you registered growth somewhere around 7% in the first half. I would just be interested to hear what you think the full-year outturn could be. I think some of your peers have been lowering the guidance there.

And then into '13 and '14 you obviously highlight that MAP-21 is a positive. I suppose the question is, is it, in your view, also a positive for volumes overall?

And secondly, if you'd just give us your view on the non-res outlook. Clearly I think your Precast business has done quite well. I think you commented that's more utility related, so I'd be interested to hear how you see that developing into the second half. Thank you.

A number of US questions there. I think on the volume side on the Materials side we would stick with our guidance from February with regard to like-for-like volumes, particularly in Aggregates and Asphalt where we saw the overall year is pretty flat. I think we were probably being more cautious at that stage than others in the sector. Some of them have adjusted towards us, but still would be perhaps somewhat more optimistic.

But, at the moment, and bearing in mind that our business is very much second-half weighted, it would be for flat overall like-for-like volumes in our Aggregates and Asphalt business for the year as a whole. But we will obviously have some acquisition effects coming in, which will contribute to higher overall total volumes.

With regard to 2013, 2014, I think MAP-21 is a positive. I think -- but that broadly sustains the federal component of highway spending. I suppose what's more important is what happens at state levels. We are seeing some continuing growth in state revenues. We have seen some states during the course of this year find additional funding for highways through additional bond issues and all of the rest.

So I think we would hope that it will be continuing improvement in the US economic picture. There will be some better state funding around, but I think probably it would be unwise to expect anything too significant in terms of volume growth in 2013 and 2014, given that the federal component of MAP-21 really just maintains stable funding.

There is a potential positive though, I think, from some of the more flexible structures introduced for public-private partnerships in the US which could contribute to overall volumes. But I think we'll have to see how that develops.

On the non-res side we are seeing, as I mentioned, some good pockets in Precast, and in some of our glass businesses, but I think, overall, when you look at the ABI indicator, it does seem as if non-res more generally has yet to really pick up sustained confidence. And I think we'll be looking at those sorts of indicators over the next month and it may be that they may not show much change in trend until we're in a post-election environment. Who knows?

Thank you. Thank you very much.

Ian Osburn, ING.

I just wanted to ask, housing is obviously clearly ahead in the US. You've hinted that retail is ahead with Storefront glass doing well in Products. I just wondered if there are any other sections of the American -- well, non-residential building perhaps, or anything else where it's looking particularly positive. And, on the flip side, any particularly negative.

Also on infrastructure, the heritage Asphalt volumes are up by 6%. I wondered what pricing was actually doing. Some of your competitors have been guiding that their infrastructure exposure was actually down year on year. So is it just regional difference which explains the difference from what you're seeing and they're seeing?

And how were you able to push through such strong price increases in markets which were, well, slightly positive at best? Thanks.

I think we've been -- and this question, Ian, I think came up earlier as well, too. I think we've had a good start to the year in Asphalt volumes. I think that has obviously helped in terms of the dynamic on pricing. I think there is also indexation in some states which helps in terms of -- it tied into higher liquid Asphalt prices.

But I think we have, I suppose, been more effective in our commercial approach, to be more selective in terms of how we bid particular contracts, maximizing, if you like, our market positions, and I think, overall, have delivered a good outturn on pricing.

Others, as I mentioned in responding to the earlier question on this topic, are less significant in asphalt, don't have the breadth of geographic coverage that we have, and probably are more regional. And also it may not be as acute an area of focus for them, given their larger activity in other areas, than it is for us, which, I suppose, reflects in the operational effectiveness and the focus we put on it.

With regard to segments that are good, I think it tends -- as I've said in the presentation, smaller scale retail glass and similar type commercial projects have been good, and the utility side has been good. But on non-residential there is still a dearth of large project activity in terms of new large, multi-storey combined maybe retail-commercial and residential-type buildings.

And I suppose that comes back to availability of financing, which is beginning to ease, obviously, in the US. But it also comes back to confidence, and we're still seeing, as registered in the ABI figures, that, that broader picture in non-res is somewhat mixed.

That's great, Myles. And just also in infrastructure as well, are you seeing an uptick in the number of conversations you're having with DoTs about infrastructure for next year? You did mention because of MAP-21 you expect the major effect to be next year. Are you actually seeing the early signs of that already?

I think it's the main bidding season -- some states begin to let work in the fourth quarter; the bulk of the states put out work for bid end of first quarter and through the second quarter. So at the moment the focus is on completing the current year's level of work. I think the dialog in relation to 2013 won't really commence until late autumn. So wouldn't have a perspective on that at the moment.

That's great. Thanks once again.

John Fraser-Andrews, HSBC.

Just one remaining question on the US. You mentioned, Myles, that your Paving margins, having been under pressure, started to stabilize now. Could you elaborate on what's behind that?

Are they at a level where even your competitors that -- it seems that there's been a switch into the paving world in the last couple of years, whether that has started to dissipate and they're moving into other areas perhaps that are in the non-res that are picking up? Or are these margins that are at all-time lows and can't fall any further? Thank you.

I don't overstate it, but I think we are -- what I said was we had seen some stabilization. We obviously need to see a lot more over the coming months and as we move into next year, but I think it is the first, if you like, straw in the wind we've seen on that particular front. I think that maybe there's a number of factors which may be contributing to that.

I think part of it is that the private side is showing some signs of recovery and more activity. I think also it may be that margins just became so low that many of the smaller contractors were finding the financial pressures of completing that work impossible to deal with. Or it also may be that we've seen some fallouts industry as well from people taking on competitive work.

This is, as I said, the early indications of that. I think we'd obviously need to see much more of it to have a strong sense that it is a fundamental change. But I think people are very keen to ask questions on this, and to get our latest thinking, and I thought it was useful just to communicate that we have seen some stabilization over recent months.

I think overall our margins in construction for the first half of this year have been down, and I suspect that they will also be down for the full year.

Could you please, Myles, give some color on how much these margins have fallen from the peak?

From peak you probably have seen a -- we do EUR2 billion to EUR3 billion of annual construction turnover, and we've probably seen margins down 3 percentage points, of that order, from peak.

Thank you.

I think I'll take one more question on the Americas if I can, and then move onto any overall Group-related questions.

Robert Eason, Goodbody.

Just one question in relation to US operations, and just in terms of bitumen costs, where are you positioned in terms of your winter storage; i.e., have you utilized any of that? Or can you take advantage of any weakness in bitumen costs as you go through in the second half of the year?

And a related question to that, in terms of your US Distribution business, some of your peers have just talked about pressures on the roofing side, given where bitumen is going. Can you shed any color on that yourself?

I think there have been price increases on the shingle side in the US distribution market this year, but I think we've been effective in dealing with those in the first half and would expect that we will be as well for the year as a whole.

Again, I think we have considerable purchasing power on that front and I think that will stand for us for the year.

With regard to winter fill, I think by end August, early September we generally have exhausted our winter fill and are buying spot in the market.

We mentioned in the release that our like-for-like liquid asphalt cost in the first half of the year were up about 11%, I think it was, Maeve. I think we would have seen -- that was for the first half of the year. We've seen a bit of softening in that through July and into August.

Still hard to be categoric for the remainder of the year as to what the outturn will be but I think, as you've seen in the presentation and from responses to some of the earlier questions, our pricing has more than offset that in the first half of the year and we would obviously be very focused on maintaining that position through for the year as a whole.

Thanks.

I think, with that, I might wrap up, given that we're moving on towards 10 o'clock. I'd wrap up on the Americas session. Again, if there are any questions on Europe or the Americas that people haven't had a satisfactory response to or haven't had the opportunity, please do email them to us and we will get back to you.

What I'd like now just to on the final segment of the questioning in relation to Group issues or any matters relating to balance sheet, overall finances, development; any issues of that nature that we haven't addressed already, happy to take questions on that.

If there are any here on the floor in Dublin to begin with, I don't see any. I see one hand up here. Gerard, again.

So just two questions, first of all in terms of development spend. Could you maybe give us a quick update on your discussions in India at present? And if that deal goes ahead or maybe could -- as opposed to that deal, could you give us an indication -- leaving that deal aside could you give us an indication of what type of acquisition spend you could incur for the second half of this year?

And then second question is just on the finance cost, if you could give us an indication of where you expect the full-year item to be? Thanks.

Maeve, on the finance cost?

Gerard, I'd say that for the full year it's likely to be double the half year. So we had about EUR145 million for the first half, so approximately double that for the year as a whole.

On the development side, Gerard, I think we never project development expenditure. You will see, and have seen from the slides, than the first-half spend was somewhat higher than -- about EUR100 million higher than in the first half of last year.

We have a number of deals, as I mentioned, in train at the moment; some requiring regulatory approval, some trying to get over final negotiations. I think we would look to see further deal completions in the second half of the year but, again, we cannot predict the precise scale of what the spend might be.

With regard to India, a lot of speculation over the last couple of months in the press in relation to Jaypee Cement, obviously, and the particular assets that were on the table. We clarified that in a statement last week.

Our interest is in the assets in Gujarat. Our interest is in taking an equity stake in that particular business. We have due diligence in process. How that progresses, what the outcome of that is, we cannot project or predict at the moment. When we have some further news that is meaningful we will be obviously communicating it, but, until then, we're not commenting beyond the statement issued early last week.

So any overall Group-related questions on the conference lines?

Thank you. (Operator Instructions). William Morgan, Goldman Sachs.

Very quick question regarding your potential for acquisition spend. I just wondered if you could comment generally about what you're seeing with potential acquisition prices.

I know often, especially in the US market, you're tending to focus on family businesses and therefore the current state of the economic situation doesn't necessarily impact pricing as one might expect. So I just wondered if you could comment on that in both the US and Europe perhaps.

And then the second question was just on the CapEx spend in terms of the relationship to depreciation we should be expecting for the year as a whole. Thanks.

Maybe Maeve will deal with the capital expenditure question; I'll just respond on development spend.

I think, as always, we are very rigorous in our approach to acquisitions and ensuring that we get good value for our shareholders. We are finding that it is, as it has been in the past, a continual battle in terms of trying to reach a conclusion on deals at prices that makes sense for us and also meet the expectations of sellers, which, in some cases, can be elevated by previous multiple experience in the industry.

That being said, I think we've had a good level of deal conclusion in the first half of the year and I would expect that we'll see some good deals concluded as well in the second half of the year.

But it is part of the natural negotiation process and it can be difficult to bridge gaps at times in some particular deals. And in those cases, because we have other opportunities, we're not reliant on a particular single transaction, we may decide that it just doesn't meet our criteria and move away and deal elsewhere.

So, again, the focus continues to be very much on value and on good early returns from acquisitions in developed markets.

And then CapEx, if I can pick up that point, Will. You saw our CapEx for the half year was just over EUR300 million. We would expect -- and that was well below the depreciation charge, and we would expect the same trend for the year as a whole.

CapEx is obviously something we're keeping a very close rein on, a close eye on it as the year progresses, particularly in Europe. So I'd expect it to be well below the depreciation charge for the year and in the order of maybe EUR600 million for the year as a whole.

Okay, great. Thank you.

Yuri Serov, Morgan Stanley.

My apologies for pressing you on the development spend. I understand that it's unpredictable, but, on the other hand, you have given us guidance, for this year at least, that it would be at the same level as last year. I just wanted to confirm that that guidance still stands.

We notice that it appears that your development spend slowed in the second quarter compared to the first quarter. Is that significant? And basically adding the same question -- will the guidance -- does the guidance still stand?

The second question I wanted to ask you on these one-offs from pensions. I personally didn't realize that you had one-off benefits in the first half of last year from pensions, even though it's not a small -- it's not a large amount. But, for example, in the context of Europe Products, it obviously wasn't trivial.

Could you please confirm that there aren't any one-offs that we may not be aware of in your second half of last year? Thank you.

The pension benefit that we had last year occurred in the Products business in the Clay component, and we didn't refer to restructuring one-off gains in restructuring there.

With regard to the second half of the year, Maeve?

Yes, there were some more in total. The total restructuring cost last year were in the mid EUR20 million for pensions. So we would expect -- there's a smaller amount in Europe Materials as well, last year. So we would expect a small amount in the second half.

Sorry, Maeve, you're talking about restructuring costs. Is that costs or benefits?

It's the cost -- sorry, it's the benefits. The gains as a result of curtailment of pension liabilities.

So you're saying that the full year was about EUR20 million, which is -- ?

It was in the mid-EUR20 million last year.

Mid-UR20 million. And you had EUR19 million in the first half?

Yes, yes. So there was another mid-single-digit number in the second half of the year last year, and we would expect something similar this year.

Yuri Serov And is it the same segment?

Yes, in Materials, in Europe.

Sorry, in Materials, in Europe this year. But what about last year?

Also Materials in Europe in the second half.

Also in Materials. Okay, thank you.

Yuri, just on development, we don't provide guidance on full-year development spend because obviously it is very unpredictable. Deals can be here today and gone tomorrow for particular reasons, arising out of due diligence or failure to conclude a sale-and-purchase agreement.

And I wouldn't either place a whole lot of reliance on terms of quarterly trends either, because of just the unpredictable nature of deal conclusion.

We have a number of things, as I mentioned, in train at the moment, in terms of some bolt-on deals in Europe. And, indeed, some bolt-on deals in the US. We'd be hopeful that those will come to conclusion in the second half of the year which, if they did, could see a second-half spend maybe on a par with the first half of the year. But it's unpredictable, and we're dependent on final negotiation process, and we're dependent, in some areas, on regulatory clearances. We don't have full control or visibility on those.

Okay, thank you.

I'm conscious that we're now beyond 10 o'clock, and I think I would just like to wrap up. Maybe take one more question of a Group nature from the conference call.

Ian Osburn, ING.

Very quickly from me, you've heard from me a lot today. Just CO2, the nominal figure of sales was up but at a much lower price. Can you just confirm that you're consuming this number of certificates in your bank?

And Maeve, I don't know if you can give us an approximate value for that. It's obviously off balance sheet, so we don't see it, just at today's CO2 price.

And Myles, on India, I know you won't want to say too much about it, but just want to get your sensitivity to the short-term risk in the country.

I think you've made it clear that long term in emerging markets is what you're interested in, but short term the risk of energy supply, coal and electricity and the potential for overcapacity and economic slowdown; just how risky you see it at the moment. Thanks.

Ian, I think all of these risks have to be factored in to the evaluation of the particular business, and we're acutely aware we have been in India, now, in our own operations for five years, with our joint venture in Andhra Pradesh.

We're very familiar with the risks of overcapacity in particular markets. We're very familiar with the logistical challenges in India, of moving product over distances. We're very familiar with the energy markets in India, and the unreliability of supply. We've addressed those in our existing joint venture through spending money on captive power generation.

So I think we have a good deal of experience under our belt in India, and all of that will be taken into account as we move through our due diligence process in Jaypee Cement, and as we strike a valuation for that particular business.

With regard to CO2, I think our policy has been, over the last number of years, has actually to broadly realize the allowances that -- within the particular year in which they arise. So we don't tend to have any significant carry forward from one year to the next, if that answers your question on that front?

That's great. Thank you very much.

So, with that, I will wrap up. I would just like to thank you all for your attention and your time this morning in posing various questions and in listening to our presentations. I think for any of you who haven't had the opportunity to pose those questions, we will get back to you and respond to you before close of business today.

I'd also thank you for, if you like, responding positively to our structuring of the questions between Europe, the Americas and on the Group. I think it does make for a much more constructive and flowing dialog and I think we will obviously want to continue to do that in future. So, again, thank you for most of you who abided with that. We will forgive John Messenger for creeping in in the Americas session with a question on Europe.

Our next trading statement is on November 13, in which we'll update you on our progress through the third quarter. We will be following that management trading statement with investor days in Central London and in Central New York, on Friday, 16 November in London, and on Monday, November 19 in London.

We do hope you can join us there. We will be able to update you on our progress during the third quarter of the year, and also be able to update you in more detail in terms of our response to the evolving market circumstances that we see across our business.

So we look forward to having the opportunity to speak to you all then. And thank you again for attending, and for dialing in this morning. Thank you.