CRH PLC (CRH) 0 Q0 法說會逐字稿

Okay, ladies and gentlemen, good morning. And you're very welcome here this morning to our webcast, which coincides with the publication of our first-half results for 2014 for CRH.

My name is Albert Manifold, I'm the Chief Executive of CRH; and I'm joined on the stage here by our CFO, Maeve Carton.

Morning, everybody.

And together, Maeve and I are going to take you through some detail of the first-half results for 2014. We're also going to take you through our progress on our portfolio review, which we discussed with you earlier this year; give you some sense of how we see the year panning out for our two major markets, indeed, other markets around the world. And in the end, as usual, we'll have plenty of time for questions and answers, to go through some -- the questions you may have in detail.

So, just looking at some of the key headlines for the first half of 2014, across our two major markets we saw contrasting weather patterns. And we saw a modest uptick across both businesses, although delivered at different times, and quite uneven recovery, particularly so in Europe. But we're going to go into the detail of that when we go into the individual businesses.

Very happy to see that we delivered earnings in line with guidance; just a nudge ahead of guidance. And good positive strong operational leverage coming through our businesses, on the back of fairly modest top-line growth, which really is a testament to the strength of the cost cutting, and the restructuring that we did in the early part of the crisis, and kept all the way through.

And delighted, again, this morning to propose a dividend, maintain the half 1 dividend of EUR0.185, which maintains the strong dividend record we have in CRH, which goes back now to 1983. It's incredible. Unbroken dividend record, which, again, is testament to the strength of the profits of our business; to the cash of our business; and also to we understand what is important to investors.

Just looking at the big picture overview of the Group in total, you can see revenues ahead by about 4%. That's delivered strongly by Europe, which is about 7% ahead of the first half last year, United States about 1% ahead of last year; and the very contrasting weather patterns.

Europe does feel like it's better the first half of this year, but it was helped greatly by very favorable weather conditions the first four months of the year, which helped construction.

In contrast, in the United States, we had another prolonged extended winter, matching what we saw in 2013, and a very slow start to construction. And we saw those trends change, and I'll go into that in a couple of moments, in those two major markets.

But on that top-line growth of 4%, we see strong operational leverage coming through, with an uplift in EBITDA of 27% across our Group, which is very good to see; and strong margin advance of 1%.

And if you think about how we thought about our business, and we spoke about our business, about bringing margins and returns back to peak during the course of the next cycle, this is a good first step in seeing margin advance. And the RONAs are advancing by about 1%, as well, in the first half of the year.

Before I get into the individual business units, I just want to update you in terms of what the market trends are for the first six months, and what we're seeing since the half year. And two contrasting patterns.

If I look at Europe, you can see Europe started off at a good pick. The first four months, on the back of good weather, and good momentum -- if you can recall, the back end of last year showed good momentum in the European markets. We had good momentum coming through, so good strong start to the year, with the first four months up about 10% on last year.

Now we saw an easing of those trends in May and June. We think some of that was pull-forward work into the first four months, impacting upon those two months. And the trends we're seeing across our European businesses, and I'll discuss them in detail as I go through the divisions, is, broadly speaking, in line, if a little bit better, in July and August for our major markets in Europe.

In contrast, in the United States, again, as I said, we saw a very slow start to the year with the first four months really being pegged down by a very long, prolonged winter, particularly across the northern States of the United States. And that slowed back and held back our construction business and impacted, in particular, our Americas products business for the first quarter.

But in May and June, when this early summer came, we saw a pickup in activity levels; and you can see that coming through in the numbers here that we're looking at. We also saw that in July and August continuing along that level.

So there's good momentum in the US businesses. It's primarily led by residential and non-residential. Infrastructure is broadly flat, but residential and non-residential are leading the recovery out of this, and we're seeing good momentum coming through, up to the weekend.

If I can go into the individual business units and spend maybe a couple of minutes in each of the business divisions, as such, Europe materials is a business which most of you will know quite well. It's a business that manufactures cement and cementitious products, concrete, concrete products, aggregates businesses.

Primarily, in Europe materials, the big countries for us are Poland, Ukraine, Finland and Switzerland. And across those markets, certainly in Poland and Ukraine, on the back of good momentum, and indeed favorable weather, we saw good margin advances; good profit advances; and good top line advances.

Switzerland, on the back of good residential work and good infrastructure work, also showed a good performance this year.

And even Finland, which, for the second year in a row, seems to be in a malaise of generally floating minus 1%, plus 1%, had a tough first half to the year. But volumes and prices were down. But I have to say, some of the [self-help] work our teams did helped our business, and we delivered result in line with last year in Finland.

But overall, the divisions showed good advances. Overall, volumes were up about 7%, led by cement, which was about 20% ahead. And I'm very happy to see again, on those high-fixed cost businesses, good upside leverage coming through and good margin expansion. So, a good delivery by this division in the first six months of the year.

Moving to Europe products -- and this is a division that received an awful lot of attention from us during the course of the crisis. There was a lot of restructuring, and cost cutting, and re-setting our businesses in this particular division. And it's very pleasing to see all that hard work coming through, on the back of some good top line improvements.

The big countries here for us are the United Kingdom; Germany; the Netherlands; Belgium; and France also is an important country for us, as well.

And we talk about uneven recovery coming through in Europe. You hear us in the countries I'm talking about; UK and Germany, strongly performing in the first half of the year.

At last, the Netherlands seems to be finding the floor. I think EUROCONSTRUCT is still forecasting construction to be down in the Netherlands this year. We think we're bumping on the bottom, before it starts to pick up in 2015.

Belgium showed signs of growth, but France is weak for us.

But overall, we saw good top-line growth, and are really happy to see the strongest leverage coming through this division here. Again, that's a testament, not to price increases, to volume, but also the restructuring and cost take-out that we did, coming back to benefit our businesses; keeping our businesses more efficient; and showing good bottom-line delivery. So good margin expansion, as well.

On our distribution businesses, again, the footprint for these businesses is Belgium, the Netherlands, Germany and Switzerland: that makes up about 95% of the total EBITDA of this division.

And this division is the one that's probably influenced most and closest to consumer confidence in the marketplace, because our DIY businesses are selling to retailers -- are retailing to people like you and I. The general builders' merchants are selling to the small-jobbing builder, plus to the consumer. And the slight uptake in consumer confidence came through in these businesses this year, and you can see a growth in the top line.

And that bottom-line improvement, again, showing good leverage coming through, helped by some self-help measures; in particular, a rollout of our Group procurement schemes across Europe, which, again, helped benefit that bottom line, and showed good delivery in this particular division.

So, overall, a little bit of an uneven picture in Europe. I would characterize it by saying a modest uptake, uneven. Strong delivery in the likes of Poland, Switzerland, Britain, Germany; flattening out in the Netherlands; slightly weaker in the likes of Finland; slightly stronger in Belgium. So a little bit uneven, probably as you would expect in the early stages of recovery from the very dramatic crisis we've been through in the last five or six years.

Moving across the Americas and looking at our Americas' material division first, and just to clarify for everybody in the room and on the lines, this is a business that supplies aggregates, asphalt, concrete; primarily, to infrastructure businesses. But this is business is about 60% exposed to infrastructure and the other 40% split 50/50 between residential and non-residential.

I think most people will know that, broadly speaking, in 2014 highway funding, which will drive the infrastructure spend, will be, broadly speaking, flat. It may be slightly up with regard to individual states, but I'm sure [you'll] give us that in the Q&A.

But, broadly speaking, any growth we've seen in this business has been delivered by residential and non-residential growth.

And whilst the top line there looks flat, actually, like-for-like sales were up about 4% in dollar terms. And on those reasonably flattish sales, again, we've seen good profit delivery, good margin expansion in this business, led by residential and non-residential. And you can see the effect of that coming through with the higher volumes coming through across all our products; and good pricing coming through, both in our aggregates business and our concrete business.

I wouldn't be too concerned about the pricing in the asphalt business. The asphalt business is significantly impacted by the cost of bitumen and how we manage that cost of bitumen. It's about how you manage the spread in the asphalt business, rather than the actual price itself.

Our winter-fill program has gone well, obviously, it's concluded at this stage, and we think it will support margins in our asphalt business for the remainder of this year.

Moving to our Americas products business, and if our Americas' materials business is a quarter 2, quarter 3 business, our Americas products business is absolutely a quarter 1, quarter 2 business.

This is a business that supplies 80% of its products to the residential and non-residential market. And, in particular, in quarter 1 it has a big sell-in to the likes of Lowes and Home Depot, where we sell a lot of pavers, blocks, architectural blocks, [coping] stones, [hard skit] into those outlets for the early spring season.

But because of the winter pattern that we saw in North America this year, that whole spring season was almost completely wiped out. You would have seen the disappointing results by those two retailer that when they reported already their second quarter numbers. So that impacted upon our business for the first four months.

What we saw then, though, in May and June, as activity levels came back, actually, we saw increased activity levels in catch up.

Now, actually, it's good news, bad news, because we get the volumes out the door, which is very good, but it comes at a cost; effectively, compress six months of production into two months. And that means we've got to double-shift our factories. It becomes much more inefficient, because we're hiring labor at higher cost. And our logistics costs were significantly higher in those two months.

So, whilst we got the stuff out the door it cost us much more, and you see the effect of that coming through in a lower EBITDA.

I should say this business, which is driven by residential and non-residential, there are strong fundamentals driving this business. We've seen a good performance of this business in May, June, July, and in August, and each month it has been starting to eat into that deficit we see there at the end of the half-year. And we think there's a fair chance that this business will get back to exceed the number of last year by the end of the year. So it's making good progress, after a very slow and difficult start.

Moving to our US distribution business, and, again, just to explain, our distribution business is a business which is largely exposed in two areas. One is what we call exterior products, and that's the largest part of this division: it makes about 70% of the EBITDA on an annual basis.

And this business supplies roofing products and [siding] products for residential developments in the United States. Not for new, but mainly for repair, maintenance, and improvement across the northern states; the north east and mid-west. Again, because of the extended winter, people just couldn't get out to repair roofs; that just held back demand for the first four to five months.

On top of that, you would have seen that, from some of the other suppliers, shingle shipments, which are a very good barometer for this particular business, were down about 5% in the first half of the year. But prices were up, and we got squeezed in the middle of the distributor. We just didn't have the volume to pass those price increases through.

But even with all of those headwinds, the EBITDA in this business was just nudge behind the first of last year, which, actually, we did a lot of work on the back of the Hurricane Sandy damage that was done across the northern part of New Jersey and New York. So, actually, quite a good performance by the exterior products part of this division.

The other part of this division, which is normally about 30% of the EBITDA, is our interior products business. This business supplies wall board, acoustic ceiling tiles, ceiling tiles, ceiling stud support systems for new residential and new non-residential businesses.

Again, on the back of a growing market, we saw increased volumes; and, on the back of increased wall board prices, better pricing as well. And that part of the division came through very strongly and helped to deliver the bottom-line improvement we saw coming through, and the margin improvement.

And again, just a test into the importance of balance in CRH, not everything moves in sequence. It's important to have a balanced push to our portfolio within businesses and across our divisions.

So, overall, the Americas, after a slow start, which impacted those businesses that had a big first quarter business, it started to come through in May and June.

And we've seen good momentum coming through; catch up in the infrastructure business in May and June, so volumes have been quite good; continued good momentum in residential and non-residential in May, June, July, continuing on for August. And we think this will be a year of progress for our Americas businesses, as they service those markets.

One slide I just want to talk to you about as the CEO is, which is really important when you manage a business, about the margins within your business. This, for me, is a window into the health of how a business has been managed; the health of how you're managing your costs; and how you're managing your selling prices.

And happily, we can see five of the six divisions showing significant margin expansion in the first six months of this year. Now, I should say, that is coming absent any real price increasing.

We saw price increases going through in the US materials business, but that really is on the back of higher cement prices. That's just passing on that; no real expansion.

We saw a little bit of price increases coming through our distribution business; and the distribution businesses in America coming through on the back of wall board pricing. But actually, to counter that, net-net, prices were back in Europe, again.

So this is really the effects of two things. It's effects of slightly higher volume levels, but also the effect of a lot of the cost cutting and restructuring work we did on the way down. And it gives me confidence to know that our teams did a great job on the way down in reorganizing our businesses; positioning them in the right place to benefit for the upside leverage, which we're seeing coming through, delivering that more than 1% margin increase.

And I think it's a real good sign of the progress we've made. We've said we're going to improve margins. We've said we're going to improve RONA. Both of them are up about 1% in the first half of the year, and it's very satisfying for us to stand here before and tell you that, that progress is made.

So, with that, I'm going to you over to Maeve, who's going to take you through some of the financial impacts of what we've seen in the delivery in these first-half numbers. Maeve?

Thanks, Albert. It really is encouraging to see that performance; five out of six segments reporting improved margins, against the backdrop that we've talking about [on matters], an uneven recovery across our various businesses.

What I'm going to do now is talk about the -- how those individual segment performance pulls together into the Group outturn overall for the first half of 2014. I'm also going to say a few words about how our debt management and financial management processes are put to work to create value for CRH.

The outturn for the first half of the year, we've already seen, sales up 4%, accompanied by a 27% increase in EBITDA to EUR505 million; a very significant improvement in operating leverage.

The most encouraging part of that result, for me, is the organic performance line that you can see there. The organic, for us, means excluding impact of acquisitions, and excluding translations impact, so the underlying businesses really delivering performance.

Before we talk about that, a quick word about the acquisitions' impact. The geographic footprint of our operations, with significant operations in Northern tier states of the US and in Northern Europe, countries where the severe normal conditions in the winter time mean the construction activity doesn't really get started until quarter 2, means that the profitability of the Group is very skewed towards the second half of the year. And that seasonal impact is reflected in that acquisitions' impact that you can see there for the first half of the year.

Cost savings have been a big focus of attention for management over the last number of years, as we make our businesses resilient and grind out some of those efficiencies that Albert was talking about.

We're on track to deliver EUR2.6 billion of savings by the end of 2015. And that effort has continued very significantly during 2014, where by the end of June we had delivered EUR45 million of cost saving benefits.

For the first half of the year, the underlying businesses, particularly in Europe, saw the benefit of those cost savings activities, which, together with the improvement in volumes, which delivered better plant utilization and better efficiencies, and the combination of all those, saw some real profit delivery in the first half of the year. Where with, against a backdrop of a 4% increase in sales, saw an organic increase at the sales level of EUR400 million, we saw profit delivery of almost EUR100 million; a 25% operating leverage for the Group.

Our focus on making our businesses better, and improving value for CRH, also is seen in our debt position figure, and in our management of -- our debt management and financial management processes.

Net debt at the end of June amounted to EUR3.7 billion, which was almost EUR0.5 billion lower than this time last year. So significant cash generation capabilities: one of the key signs of the financial strength of any company.

Another indicator of financial strength is the ability of a company to cover its interest costs with cash earnings. EBITDA-to-interest cover for CRH for the 12 months ended June 2014 was 6.2 times, so a very healthy level of profitability relative to the financing costs of the Group.

The combination of those two financial measures, strong cash generation and good interest cover, support the ratings that we have from S&P and Moody's: BBB plus from S&P, and Baa2 from Moody's. Those are strong investment grade ratings; and the reason those are important for CRH is that they provide access to multiple sources of funding for the Group.

In as recently as last month, we were able to raise EUR600 million in the Eurobond market; the third time we've accessed the Eurobond market in the last 18 months, or so. And in raising that EUR600 million, we also secured the lowest ever interest rates for CHR in the capital markets; 1.75%. We couldn't have done that without that financial strength behind us.

The combination of that EUR600 million recently raised, with the gross cash of EUR1.1 billion that we have in the balance sheet at the end of June, and the EUR6.2 billion of committed undrawn facilities that are available to the Group, mean that, as of now, we have significant liquidity of EUR4.3 billion available to CRH. And what that does is give the Group -- puts the Group in a very, very strong flexible position to take advantage of opportunities and acquisitions, where we see the possibility of creating value for CRH.

I talked about the net debt reduction of EUR0.5 billion in the period. A lot of that reduction was delivered through improvements in operating cash flow.

The first thing to say about operating cash flow in the half year for CRH is that the seasonal effect that I talked about in terms of the profitability of the Group is also very apparent in our cash flows at the half year, where we traditionally see cash going out as activity picks up during the year.

Also, against the backdrop of the improving economic backdrop and sales improving, we might have expected working capital outflows to increase during the recent period, as activity picks up.

We're very happy with the results in the first half of the year, where, as a result of paying attention to the basic fundamentals of financial management, which is looking after credit control, following up on receivables from our customers, making sure that we manage inventory carefully. The combination of all of those boring day-to-day financial management techniques have resulted in a reduction in working capital outflow, a 13% reduction, against the backdrop of an increasing sales environment. So we think that's a very strong performance.

We've also maintained our discipline in terms of capital expenditure, which, again, against the backdrop of improving activity across our businesses, we saw capital expenditure reduce by EUR26 million in the period.

The combination of those factors resulted in our operating cash outflows actually reducing by EUR300 million during the period; and that resulted in the net debt reduction, also. So, very strong cash management as well.

And finally, before I hand you back to Albert, a quick word about our financial discipline, and how that's put to work to create value for CRH.

First of all, my usual slide in relation to debt maturities, where we've shown here our net debt including the EUR600 million that we raised last month on the Eurobond market, spread out by year of repayment. And the purpose of that is to show how part of our debt management efforts are directed at making sure that there is no undue bunching of maturities in any one year, and that the Group is well organized and has an orderly approach to its debt management.

Another very important aspect of that debt management is the ability to take advantage of the current low interest rate environment. I've already mentioned the Eurobond, the EUR600 million that we raised last months, and two issues in the Eurobond market last year also: securing for CRH long-term fixed rate interest that is historically very low.

And I think that's best expressed by the blue line on the chart there, which shows the average interest rate for CRH from 2012 out from -- to 2022, and 2021, and beyond.

As you can see, we're moving from an average interest rate of over 5% in 2012, down to rates that will be in the region of 3%. What that is showing is that the financial management and debt management efforts of CRH are also focused on creating value for the Group by securing lower long-term interest rates, which means higher profits, which also means lower average rates of debt, and lower cost of capital; and all of that setting CRH up to create value.

And now, I'll hand you back to Albert.

Thanks, Maeve. Just before we leave that slide, I think we've glossed over these numbers very quickly. We talk about cash management in CRH, but just look at what's been achieved in the first half of this year.

Anybody who runs a business knows, in rising activity levels that leads to an outflow of cash, in working capital to support those businesses; capital expenditure, because the guys in the business will be saying, please help fund the growth. And what have we done in the first half of the year? Actually, we've reduced working capital by 13%.

Maeve talks about all the boring work that's done by the accounts receivable people, stock management people, but it's not a boring result.

And look at capital expenditure: down to 67% of depreciation. And how have we achieved that? Well, we've seen precipitous declines of industry and we just made sure that people used all the equipment that we had paid for in the past to its fullest capability. There's a lot of equipment and plants lying around and we use that before we go out and spend our valuable money on capital expenditure. That's what we should do in managing a tight ship, and CRH is a tight ship.

And then you look at the cash resources: over EUR4 billion of funds available to us. It's hugely important to us, great flexibility and great strength in the balance sheet.

And then finally, look at that blue line that Maeve referred to, the lowering cost of debt. And remember back to February, we talked about the returns that we generated and acquisitions we've done over the last three years.

Over 95 deals over the last three years; we've spent EUR1.6 million on those deals, and we've generated returns in excess of 11% against that cost of debt. That's value creation coming through, so a really good performance.

I just want to update you on our portfolio review. You might recall, in the fourth quarter of last year, in November, we set out for you that, with the evolving change, with the evolving market circumstances, and acceptance of the fact that the post-crisis world was going to be different to the pre-crisis world, we needed to take a real look at our businesses.

We knew there were parts of our businesses where we were very good at creating value and driving profitability. We knew there were parts of our business that no longer met the original investment thesis for which we made that investment. And we wanted to have a full look at our portfolio, and also a full look at where those businesses were positioned. And we said it would take us about nine months, or so. We indicated the end of quarter 3; we're progressing towards that. We'll finish our portfolio review during the course of the next few weeks.

With regard to that, the whole purpose of this is really resetting CRH for growth; looking where we can leverage our strengths across our businesses; looking where we are best at driving value across our business. That's what the purpose of this is about. And also, making sure our businesses are best positioned in the product markets, and the geographies, for organic growth; and also for acquisition growth as well, which is a key part of CRH.

I can confirm to you this morning that our focus on our core business has [produced about] -- to say to you this morning, confirm to you, that about 80% to 85% of our businesses are solidly core businesses and a fundamental part of the growth of CRH, going forward.

Those businesses actually delivered about 90% of the EBITDA in 2013. That will lead to likely divestments over the course of the next few years of about EUR1.5 billion, potentially up to EUR2 billion, worth of businesses.

That process has already started. A number of those businesses are already out in the market, and on the block. I'm not going to comment on any specific circumstance here today, because actually our main concern is our shareholders and creating value for them. But some of them are out there, as it is, at the moment. Some will be held back so that profits can improve in the recovery.

And we will sell into the recovery. There are no fire sales in CRH. This is going to be an orderly, managed, multi-year process, which will lead to an allocation and reallocation of those funds back into our core businesses, where we find it best to create value.

The one thing you should take away with you today: active portfolio management is now a part of CRH going forward. This is a process that continues on.

We talk about our core competencies and core businesses in CRH, and I could be here for another week explaining to you, business by business, why it's a core business, what are the advantages.

In an effort to try to communicate to you why we see certain businesses being part of the future of CRH, we wanted to set out for you come of the core characteristics, the key characteristics, we see in some of our better businesses. We've set them out for you here on the screen this morning.

The first one there, strong strategic platforms; we just find, where we've got businesses with good strong logical platforms, that is a base upon which we can build a business and build value going forward.

Let me give you a couple of specific examples. The obvious one is our materials business in the United States. If we have a resource-backed asset, such as a big aggregates facility close to a market location, that seems to be a base upon which we can build a profitable, long-term growing business, but in a completely different part of the business, a different way.

Take our Europe distribution business. Actually, the strong strategic platform there is provided by a network of distribution businesses that are interlinked and self-supporting, creating a strong market position and a strong market network. That too is a strong strategic platform upon which we can build a business.

Then we move onto the next stage of value creation in CRH; a proven value creation capability, proven operating capability. And how do we do that? Well, in heavy [site] businesses like [OMG], again, let me use that example.

You know we pursue a solid vertical integration model. So when we have an aggregates facility, what do we add to that? We bring the asphalt business to that business; we bring a ready-mixed concrete business into that business, the concrete products business. All of them drawing volume down from the core asset and increasing the throughput, increasing efficiencies, and increasing profitability of the core asset.

But also getting profit pick up in all the downstream businesses as well. We are leveraging the strength of our businesses across the base asset.

Leveraging the strength is exactly what we do in the other example I gave, of Europe distribution. We just do it in a different way. Again, just imagine the advantages we have in procurement, on merchandising, on marketing, on selling prices, on [category] management, on IT across a strong network of distribution business, against our competitors, who are not so big. So again, leveraging that scale delivers value for us.

It's a key part to the next part of value creation of CRH, which is the acquisition opportunities, because we must have road from acquisition growth for us to create value to our aspirations.

Historically speaking, we have said to you that two-thirds of the profit growth in CRH has come directly and indirectly through the acquisition process. When we buy businesses, we create profits and returns for our shareholders. That's what we do. And we have to have road ahead of us.

Again, going back to the examples I gave you, if I look at the fragmented nature of the materials business in the United States, I know there's enough acquisition road ahead of us for the next 30 years, or so.

If I look at the distribution business in Europe, it's a fragmented business, particularly in Western Europe, servicing the (inaudible) [mine] market. And again, the advantages of scale, leveraging our scale, provide lots of acquisitions opportunities for us as we develop that business, going forward.

And all of that overlaid by solid organic growth. Again, going back to the examples I gave, if I look at the United States construction market, the fundamentals driving that market are population growth; strong economic growth; demographics. We're going to see construction growth in the United States for all our natural lives.

In Europe, even though the new-build markets may be challenged to still grow in the Western part of Europe, actually, the repair and maintenance and improvement market, which the distribution business almost exclusively services, actually is a growing market. It was very resilient during the downturn, and it's going to show good growth as we lift out of it. Again, a growth market by which we can deliver value for our shareholders.

And it will lead to a business which is narrower and deeper; a business that is focused on returns; and a business that is focused on delivering value for our shareholders.

I could have used the examples of our cement businesses in Eastern Europe, which are exposed to higher growth there. I could have used the example of a residentially and non-residentially exposed America's product and distribution businesses. They just do it in a different way. But these strong strategic platforms position us with a portfolio of business to drive growth and returns, going forward.

This active portfolio management is not something you start and stop: this is something you start and becomes an active part of your day-to-day life. It's about having the right amount of capital in the right markets, focused on the right businesses.

We keep one eye on the strategic balance of our business. We know how important emerging markets are, and we will develop those in time in a measured approach. But we'll keep a very keen eye on the value creation in the short to medium term, and delivering across our main markets.

Now, I know you all want me to move quickly to the outlook and give you our prognosis and outlook for the remainder of the year. But I'm going to take a moment of your time just to talk to you about how I see CRH after eight months as Chief Executive in the business.

We work in our industry to be here at this time. It's a volatile cyclical industry. It's a terrible business on the way down. It's got sticky costs. It's brutal to take costs out. You've got to lay off and make restructuring. But on the way back up again, if you do the right work on the way down, you'll enjoy the benefits on the way back up.

What we've seen in the construction industries in Europe and in the United States, we have seen the signs of growth for the first time in eight years. The US, the past 12 to 24 months has exhibited signs of life; surprise, surprise, led by residential and non-residential. Infrastructure will come in time when they get the funding right. And now we're seeing signs of stability coming to Europe, and growth in the better prepared countries.

As a Chief Executive, I wouldn't want to be anywhere else but running CRH at this time in the cycle for construction.

So, that's the organic growth. But what do we do in CRH to make a difference? Well, I've spoken to you about continuous improvement. Our business is a business of pennies. Pennies matter every single day, and we have to manage those pennies very, very carefully. We do that by focusing on a formalized approach to continuous improvement, to keep KPIs across our key businesses; benchmarking across all our individual divisions and outside of those divisions; constantly searching to reduce our costs and improve our margins.

That is what helped deliver our leverage we saw coming through in the first half of this year. And that's great, and many companies do that. But the real benefit for CRH is when you marry that continuous improvement with our acquisition model, because that's where we are different. And I'm not talking about our industry; I'm talking generally about general industrialists.

The average sized business in our industry has got revenues of about EUR50 million for a collection of small, local businesses. And actually, the average sized deal we do when we buy a business is about EUR50 million of revenues and size.

But what we do is when we marry that unique acquisition strategy of small, mid-sized businesses with the continuous improvement model we have in our core existing businesses, that's how we create value. Because our acquisition strategy, it happens across many, many deals every year, it's low risk and high returning, and has delivered results for CRH for decades; and will continue to deliver results for decades. It's how those two marry together that's really important, and that will be a key part of driving value going forward.

And now what's different? We marry that with active portfolio management; strong capital discipline; looking to shape and reshape our portfolio; constantly making sure that our assets and capital are deployed in areas where we get the maximum returns. That's the magic of CRH. That's how we've produced industry-leading returns for the last 30 years, and that's how it will continue.

The last point I want to make to you after eight months in is the balance sheet. Maeve talked about EUR4.3 billion of available funds. You saw the strength of the balance sheet. You saw the strength of the cash capability, the operating cash flow coming through. That balance sheet is the future profit of our business. And I can assure you, we will use that balance sheet wisely.

So they're just some thoughts, after eight months in, of what we see, and what I see personally as the Chief Executive of CRH, are the opportunities for us ahead.

If I can just turn to the outlook for 2014, well, we see a continuation of the modest, albeit uneven, recovery that we're seeing across Europe continue for the remainder of the year.

The first four months are in the box, and they were delivered. What's been delivered since May, June, July, and August is pretty consistent; it's kind of down to flat.

When we talk to our customers, when we talk to contractors, effectively, all around Europe, as I've done in advance of this presentation, the sense we get is that the momentum is there. What we have gained we will hold, and it will be broadly in line with the second half of the year, with what was a very, very impressive second half in 2013.

US is different. We had a very weak first four months because of the weather. But since May, and in June, and in July, and now in August, we're seeing a fairly sustained delivery of volumes coming through, and some price increases coming through as well, which is very welcome. And we see that continuing for the remainder of the year. That leads us to believe the United States will be ahead of what was a very strong second half of 2013.

And leads us to confirm this morning the statement we made in May, at our Annual General Meeting, when we said that 2014 will be a year of profit growth in CRH.

I'd like to thank you for your attention for the presentation this morning. We're now going to move to questions and answers. We're going to take questions from the floor, first; then move to the telephone lines; and then move to the web.

If I could ask you, just for the benefit of everybody watching in from outside this particular room, to state your name first and the name of your institution. (Conference Instructions). So maybe we'll move to the first question. Barry?

Barry Dixon, Davy. A couple of questions, if I could. Just going back to your thought, Albert, eight months in, and in terms of the balance sheet. Clearly, as Maeve has pointed out, the balance sheet is in pretty good shape, raising money at historically low levels, and now you potentially have another EUR2 billion to add to that.

The acquisition activity in the first half of the year well down on the first half of last year, is that an increased financial vigor on your part? Or how do you see yourself using that balance sheet? Or, I suppose more particularly, in terms of at what point do you come under pressure to do something different, other than acquisitions, with the balance sheet?

Second question is on incremental margins. And 25% at a Group level in the first half was a great performance, and very different performance, 37% in Europe, and I think 5% in the US. Is that 25%, in your own thought process, sustainable going forward? And is that the kind of incremental margin that you see as being sustainable?

Then lastly, just a question on Poland, in terms of the outlook in the second half of the year and into next year; and, maybe, also your quick thoughts on Ukraine and how the political situation might impact the business there. Thank you.

Thanks, Barry. Three questions there about acquisition pipeline, margins, and Poland. Maybe if it take the first and third one, and maybe at the end pass the question on margins and pull through of leverage to Maeve, if you don't mind.

The acquisitions on the first half of the year are light when you compare them to previous years, but there's nothing significant in that. We have a strong capital discipline in CRH; that's always been there, and we keep that vigor.

The three years of acquisitions I referred to in February of this year, and our results, which talked about the acquisitions we did in 2011, 2012, 2013, the results of those were delivered because we had vigor in acquisitions during that process. There's nothing significant there, it's just the ebb and flow of deals, as such.

Our pipeline is good across a wide range of businesses, and it's just a question of being disciplined and being patient. We know this game very well; it's happened before, and will happen again. So nothing significant, the pipeline is quite good. And I'm convinced that we have the balance sheet to support that, and we will utilize that balance sheet to create value going forward.

With regard to Poland, I think we saw the first half of the year benefiting very strongly. Overall, the market was up about 20% in volumes at the first half, but that level of volume increase is not sustainable. Our own sense is it's going to taper up.

Again, you've got much stronger comparables in the second half of the year against 2013, but we do think the cement market will be up for the full year. We think the cement market will be about 15.2/15.3 million [tonnes] in Poland this year, which would represent about a 7% increase overall. So it will taper back a bit against very tough comparables. But the momentum is good.

What's disappointing for me in Poland is the fact that prices went backwards this year. A 7% price increase in a market that's up 20% the first half should not be a market that has that price declines; it should be a market that sees some price increases, particularly so over the last number of years, where we've seen difficulties in pricing there.

With regard to Ukraine, I suppose the direct and indirect consequences of our businesses, first of all, our businesses are located in the western part of Ukraine, which is a long way from where the trouble is. We're closer to the east of France than we are to east of Ukraine. Our businesses have actually shown good delivery in the first half of the year, probably a follow through and continuing and finishing our work from last year, rather than any new work.

And that probably will be the concern I would have with the political uncertainty, is the amount of capital that continues to be invested in construction. Ukraine is primarily residential construction, as local people are building apartment blocks, moving out of the country and building apartment blocks. The question is would that level of activity fall back.

Actually, in talking to one of our major customers, contractors last weekend, he was telling me that, in fact, there's a big shift from the east of Ukraine by professional people back into Kiev, back into the west of Ukraine, which is actually our main market. And he anticipates that to be a lift in 2015, but I wouldn't overcook that yet.

And so I think there's a lot of uncertainty about the second half of the year. We think this year's profitability in Ukraine, for us, will be about in line with last year, so we don't see any huge big decline. I think the effects of what's going on in Ukraine will be more longer felt.

And just finally, the indirect effect, before I pass to Maeve, in terms of the sanctions that we're seeing, Russian sanctions on Europe, it's very early to say whether they're going to have any long-term effect across Europe. It's a concern; it's a worry for broader general European economy. They've only just started, so we'll see what will happen. And maybe governments will alleviate, or there'll be some change in that, but we'll have to just to watch that, and we'll update you obviously in November.

Maeve, maybe I might ask you to comment on the margins and the leverage.

Thanks, Albert. So, yes, indeed, a very strong operating leverage in the first half of the year; 25% on the sales increase of 4%. That is largely delivered in the European operations, which had a year-on-year benefit, or a first half-to-first half benefit that was very strong this year.

I think for the year as a whole we would see margin improvement, that trend continuing across our businesses and, hopefully, some catch up in the Americas product business, as Albert was talking about, and improving markets there.

So I think it would probably be unrealistic to think that the operating leverage of 25% we saw in the first of the year would be a sustainable ongoing level. The more sustainable level is probably more in the region of 15% to 20%.

Will Morgan, Goldman Sachs. [I've] --

(Operator Instructions).

-- we are seeing historically low levels of financing costs, which presumably is pushing up prices. I just wondered if you could talk about the pipeline that you see; how attractively priced it is, and specifically whether or not you're interested in any of the assets coming out of the Holcim and Lafarge merger.

The second question relates to the CapEx spend, which is obviously down quite dramatically. I wondered, maybe, if you could give a bit of an elaboration on how you would see CapEx depreciation evolving as we move into the second half, but also into 2015. Presumably, that's got to step up from the kind of ratios we're seeing at the moment.

The third question just relates to pricing power. Obviously, in Europe the pricing seems to be net down; you're not really getting any major positive spread in the US. I would imagine US pricing does improve from here, but in Europe could you maybe comment a little bit more about where the sticking points are vis a vis pricing, and when you can start to see some of that pricing power come through? Thanks.

Thanks, Will, and good morning. If I take, again, the first question on the acquisition environment, the pricing, and also the pricing power, and maybe I'll let Maeve again come on the second part on the area of capital expenditure.

The acquisition environment that we're seeing out there on pricing in particular, there's broadly no change over the last 12 to 18 months. I'm aware that there's a lot of money out there. There's a lot of money out there chasing many assets. We don't see -- and it's been there for quite some time, so we're not seeing a particular change in that environment.

What I do know, from my own experience, that having unfortunately lived through a number of recessions, that the period of most distress, the period of most opportunity, is actually as you come out of a recession. That's because people will find as they draw on cash now that's when things get tight for them, and that's when things bite, and that's when you see opportunities for distress sales and distress purchases.

The second part is the fact that -- we have been consistent in saying this: one of the reasons in the crisis why we held back our acquisition spend was because we had little or no [raisability]. Every year was declining by 10% or 15%, but now at last we're seeing some stability. And that gives you a little more confidence when you're looking at your models, when you're looking at your forecasts; and that gives us confidence when we look forward with regard to acquisition spend.

The other point you had was on pricing power, which is a really key question, and a very important question. And if I can start in the US, you specifically asked about Europe, but if I start in the US, because that gives you an indication of the way things are going. You're right: again, we've always been consistent in saying this, you have got to see strong volumes coming through for a period of time to give people the confidence that pricing's back.

Just think of the mentality of what is going on in people in raw materials businesses, or any business in construction at the moment. They have been through the most dreadful precipitous falls, where volumes have declined by more than 50%, 60% in the worst markets. They are just glad for work; pricing is not even in their mentality, they just want to see their factories being filled.

As capacity gets eaten back up with the more sustained pull through, that's when people start moving to pricing. And we're just entering that phase in the United States now. So you're right when you say that, Will: we're just going to start to see that coming through now. And you'll see it in the areas with the narrowest, tightest supply side, such as the cement, the aggregates, but that will drift on down through the chain, because it starts at the top and drifts down through the chain.

Europe is at a different stage of its recovery, and it's very patchy, and it's very weak. I think we're going to have to see, country by country, a little bit of a more sustained pull through on volumes.

Just look what's happening here in the United Kingdom; you've seen now, with the help-to-buy schemes now coming through for the past 12 months to 24 months, strong volume growth and strong pricing power in the hands of individuals who supply the residential market. That's what you're going to see country by country, but only as volumes come back.

So that will be how I would see and look at pricing.

Maeve, do you want to do CapEx?

And in terms of capital expenditure, yes, we have seen significant discipline being applied to the capital expenditure in the first half of the year. And as Albert was saying, our focus has been to get our operations to use the assets we have on the ground, and make sure we're using those fully, before we spend money on expanding in the business.

I would certainly see the rate of spend beginning to trend upwards. It's clearly not sustainable to continue spending at a level of 67% of depreciation over the long haul. So I would say -- I still think for the year as a whole the final outturn will likely be around last year's level, or maybe slightly less, but trending upwards closer to 80% to 100% of depreciation over the next year, or two.

I'd like to add, because a lot of my colleagues in CRH around the world will be listening to this, I'd like you to use your capital expenditure that you have first before you get any new CapEx. That's not to this room, that's for the wires; forgive me.

Will Jones, Redburn. Three, if I could, please. First, could you just comment more specifically around pricing in Americas' products? I think at the start of the year we talked about it had a couple of good years of volume, and this is a decent test for the pricing environment. Has the weather issue just pushed back by a year any pricing gains? But just further comments there would be great.

On Americas generally, the like for like in the last couple of months to the end of the first half [due] before, do you think that's indicative of the second half? Or can it push on from there, just given weather catch up? And are you expecting all three divisions in Americas to be ahead in the second half, as well as the region as a whole?

Then the final one, which is around Holland, obviously, there is some better data emerging from a confidence perspective and lead indicators on new housing. Is that something the guys on the ground are starting to recognize, talk about? If so, when might it impact? Thanks.

Okay, just three questions there. With regard to specifically to Americas product, Will, I would expect, on the back of the good fundamental volumes that are driving that market, which is the exposure to residential and non-residential -- residential in the US in the last 12 months forecast [at above] 10%, the year to date was about 7%, driven by multi-family homes. So there's good momentum there.

I think the non-residential market is up about 5%, or so. It could be up to 10%, depending on where you were originally, particularly out west.

So those two fundamentals giving good volume growth. And on the back of that, the cement price increases coming through, those cost increases, that allows you to pass on pricing. I think the issue we've seen this year has been more to do with the specific weather-related issue for the first four months.

And if I can let that question fall into the next part of your question, which was how those divisions will perform for the remainder of the year, and talk about products specifically, and then go onto materials and distribution, the products business again has shown a good uptick in its businesses since the first four months. So May and June, June in particular was strong; July has continued in the same vein; as, indeed, has August.

The materials business, what we've seen in May, June, July is pretty much the same trend evolving, and we think it's going to continue.

If you remember, our materials business produced about two-thirds of its profitability during the key months of July, August, September; I think we're halfway through that period now with good volume throughput. Our backlog is ahead of last year, our margins and our backlogs are ahead of last year, so all the indicators are pointing in the right direction for it to continue that trend.

And likewise, with distribution, if I back out the first four months which hit the exterior products, which was offset by the interior products, as I explained during the presentation, I think the momentum is good for that particular sector.

The flip side of the bad winter is the fact that work is put off. But also, roofs get damaged during the bad winter so we get to do that work during the summer. I think my own good feel is actually we will see progress in all three divisions over the last in the Americas.

You just specifically asked me about the Netherlands, and just specifically how we see things going there. The Netherlands is coming down after, gosh, no, where are we now, four years of very steep declines. Residential is forecast to be down -- sorry, new residential is forecast to be down about 9%, overall construction flat to maybe minus 1% for this particular year.

And it feels like that in the Netherlands. It feels like we got off to a rushed start with good strong spring sales through that's kind of petered out a bit, and I think that's what we're going to see in Holland for the remainder of this year.

What we are seeing, though, again, talking to contractors, talking to our customers out there is, I think, they're quite hopeful for 2015 coming through; starting to see some plans in their order books; a bit more planning going on; applications for house starts as well.

So we're starting to see the Netherlands start to pick back up out of it. And I think we will see that at the back end of this year if we get a bit of weather, and certainly in 2015 of next year. That's our [point] and our views on that.

Yuri Serov, Morgan Stanley. Two, or maybe three, questions. First of all, on acquisitions, there was a question about your appetite for the assets from Lafarge and Holcim. I would like to press you a bit more on that.

I'm not asking for specifics, obviously, you cannot give us specifics. But on the other hand, in your portfolio review one of the conclusions that you came out with was that you were thinking about deprioritizing Europe, and especially new-build Europe, as an investment destination. Many of the assets that Lafarge and Holcim are going to dispose of are actually in Europe, exposed to new-build, which is cement. What are your thoughts around that? Thanks.

Secondly, US infrastructure, you saying it's still flat. On the other hand, your asphalt volumes are up by 3%. Obviously, that's not flying, but that seems like a reasonably decent performance coming out of a recession. At what levels will you start sounding more positive on US infrastructure? And what are your expectations of how that's going to develop into the future?

And just one quick question, to clarify. You're talking about disposals of EUR1.5 billion to EUR2 billion in the next few years, is that the amount of money that you're planning to receive? What do those numbers represent? Thanks.

Thanks, Yuri. I thought I'd dodged the Holcim, Lafarge question so far, but thanks for bringing it back. If I leave the disposals questions for Maeve at the end, and maybe I just address this specific question on Holcim and Lafarge.

CRH have their own strategy for value creation; we're not reliant on anybody else producing any other list of assets that they wish to dispose of. We've set out our stall during the course of this year. We're a business that's going to be focused on returns for our shareholders.

We've got strategic platforms. We are not a cement business. We are a broad-based building materials business, a diversified business with many geographies, and we look to extract value across those businesses with service, different markets and different geographies. Now cement is part of that, but whatever we do, it's up to CRH to decide what we do; and it will all be about value.

If you buy a business that is too expensive, you spend the rest of your life paying for it. I know that through bitter experience. So if we can buy businesses, from whoever they are, wherever they are, at the right price and create returns for our shareholders that's the key focus; not any particular suite of assets that are for sale at the moment. And I don't think it helps anybody if I go into specific circumstances, as such.

We note the fact that [produced list]. Like anybody else, if we see value there we'll enter into the process and have discussions, but no more than that I want to say.

Specifically on the US infrastructure, and the fact that asphalt volumes are up about 3% in the first half of the year, that's quite regional, actually, more than anything specifically.

At the end of the day, the spend to US infrastructure from the federal government is flat. What you are seeing is a little bit of an uptick coming through particular states attend the needs of those states.

You see what's happening in Florida. With the sheer expansion of Florida, they have got to build infrastructure at a higher rate. So the state itself is committing more money to infrastructure spending.

There's a big bill going in front of the Texas Legislature in November this year to increase the state's contribution by $1.8 billion annually to funding in Texas; again, because Texas is going to be the fastest-growing state in the United States.

We've seen it come to Ohio, we've seen it come to Maine, Pennsylvania, where they're making small adjustments because the federal government cannot support the level of infrastructure that it needs. That might provide a little bit of growth during the course of this year. But the long-term trend will not change until you see a long-term federal program put in place for funding. And, obviously, we don't see that coming through this year, and the discussion [on the base would] happen next year.

That answer your question? I think it does. Okay.

And in relation to the divestment program, earlier in the year, in announcing the portfolio review, we talked about approximately 10% of the businesses which at the end of last year we wrote down to an expected value. That's obviously included in the total number of approximately EUR800 million, or so, of the EUR1.5 million to EUR2 billion, is that 10%, or so.

Then, the balance is really -- of the next 10%, which we've been looking at more closely in the last number of months, we believe somewhere a little bit more than half of that is likely to -- is for divestment, and so that's where we arrive at the EUR1.5 billion to EUR2 billion.

John Messenger, Redburn. Can I just come back to the drop through kind of answer earlier from Maeve, just in terms of that 15% to 20% is a more sustainable level going forward?

Coming back to your point, Albert, pricing tends to follow 18 months, two years beyond the pick up in volume. When we think about that pricing dynamic picking up, unless you're worried about cost inflation pressures, which I guess will be understandable, but they'll be a bit more labor pressure potentially there. But surely, that 15% to 20%, if anything, the 25% we saw in the first half, there's a good reason why that actually should continue and it'll become more price driven, rather than volume driven once things pick up a bit of traction. What is making you more cautious, other than CRH's natural caution on these kind of things?

The second question was just around acquisitions going forward in that you laid out the four platform drivers in terms of why you're good at doing them. But I just wondered, could you give us a bit of flavor on -- because, clearly, emerging markets want to be part of this. But can you give us a bit of a commentary around the China businesses, India, where you'd want to go? Because it looks to me as though really these are going to be platform startups, when you do start to spend from here, in terms of what you do.

And not looking for geographic, but from the point of view of the last few years, CRH went off kind of going a little bit wider, and also did deals that were slightly clever in terms of shareholder equity positions and JVs.

Now, JVs were always part of what CRH did originally, but are you now more keen to make sure you buy things lock, stock, and barrel so you get full control of cash flows, and that actually the experience of the last few years, the Denizlis, the Unilands, and all the rest of them, those didn't prove great? Is that just because they were unique transactions? Or is there something going forward that means you should really buy businesses in totality, rather than leaving shareholding partners?

Okay, John, thank you for that very detailed question. The last question, maybe I'll take that one first, and pass, again, the follow-up question to Maeve on the drop through margins back to her.

Just generally on our emerging markets strategy, I want to be absolutely clear; CRH, over the next number of years, will increase its exposure to emerging markets. We will do that because the nucleus of the world is shifting to the east.

If you look at construction growth and the forecast for construction growth, it is clearly going to be driven by India, and China, and Brazil, and Indonesia for the next 25 years. If we aspire to being a global leader supplying building materials, we must be in these markets. But in being in those markets, what are we going to be in those markets for? We are going to be there to make money and make returns; that's what CRH focuses on.

Long term, I'm an emerging market bull; actually, short term I'm a bit of a bear. I think they're going through a period of readjustment. They saw strong growth for the last eight, nine years on the back of a lot of cheap available finance flowing from the developed world into the developing world; that has now changed.

What you're seeing is countries, such as India, for Prime Minister Modi has started down the road, you've seen it with Xi Jinping in China for the last couple of years, where they are starting to make the fundamental adjustments to the society and economies that they should have been making for the last 10 years. That adjustment is coming at a cost in terms of progress, development, and economic growth. And you've got issues such as over capacity; you've got issues such as oversupply and pricing, so there's huge complexities there.

Indonesia, just starting now that whole process.

We've got two very good footprints in southern India and North East China.

We have a temptation to try and measure our progress in these things in quarters or years. Actually, they should be measured in decades, because that's how those countries will evolve. And we will support them when we see the returns coming through.

The method of doing so, you rightly say, going back to history of CRH, actually, JVs is what we did; participations, understanding our business, the slow step in. I don't see that changing.

It is more complex in managing your relationships, but we do more time looking and talking to and understanding our partners than we do actually understand the business themselves. Because actually when you get in and run the business, actually the dream is over; you've got to work with the partner, it's a marriage.

So we've been quite good at picking our partners very carefully, and most cases it's worked out very well. It's a low risk way for us to enter into new businesses, new regions, and new countries, and I think it will continue.

That's not to say that if we see the right opportunity for a wholly owned business in India, China, because we've got proven capability there now, that we wouldn't step up and take 100% deal. So I don't want to exclude anything; they will remain part of what we do, going forward.

If we come back on the margins, it's obviously very gratifying to see the 25% operating leverage in the first half of the year, and that was delivered without any price increases. Obviously, we'll be looking forward to the benefit of price increases over the next number of years.

I think in indicating a sustainable level of drop through from increased sales, I'm trying to be realistic, taking into account the mix of our businesses, and the other side of price increases for us is cost increases as well. I think it's a mixture of the mix of our businesses, and being realistic in terms of the overall [deliverable], but we certainly expect to be able to deliver good drop through from top-line growth.

And a follow up, I think we're working in a fairly benign cost environment at this particular time, right now. That's not always going to be the case, and we know that, so I think some factoring into those numbers, [to be more careful].

Gregor, here in the front?

Just couple of questions. The first one on the Ukraine, can you just give us the actual proforma sales and EBITDA? Obviously, there's the Lafarge asset coming in which hasn't -- last year wasn't in the numbers, so I'd like to have a pro forma number from the prior year so we just get a feel; and whether your comment on being flat on that is an organic, or whether that basically -- the acquisition offsets the underlying decline.

The second question is on US infrastructure. This is a highway bill which is expiring shortly. I just wanted to get what your guys on the ground are thinking in terms of what we should be expecting for a multi-year solution; perhaps, I suspect it's a 2015 event.

Then finally, on the portfolio review and divestments, and this may be a bit controversial, but clearly you sort of describe CRH as an asset manager of building materials companies. Is there not a case, on that basis, that you actually sell assets when they're performing extremely well, which is always a very difficult thing to do, as opposed to looking at it?

Clearly, I guess, looking from the margin profile of the businesses that you identified they're clearly sub-par, some of them perhaps structural. But there's obviously also very well-performing businesses within CRH, and if somebody pays you a stupid price shouldn't you be disposing of it? Thank you.

Again, maybe I'll take the second and third questions, Gregor, with regard to the specifics on the US infrastructure, and also in terms of your comment on the portfolio and divestments; Maeve, you can fill in the detail of Ukraine.

I don't have any great insight I'm going to share with you this morning with regard to what's going to happen in 2015 about long-term funding in the US.

We, as part of associations, are consistently working with politicians to set out for them what we believe is a very compelling case to increase spending with regard to infrastructure spend in the United States. Everybody we speak to agrees with us. Nobody has any suggestion as to how they're going to do it because it's tied up in US politics, which is very, very difficult.

So I don't have any insight, other than to say that this constant roll forward is not sustainable. Because with price increases coming through, of course, you're getting, net-net, a slower and lower spend on actual infrastructure. And the key issue is so much of the spend now is being focused just on repairing the infrastructure that's there.

Remember, there's 30 million people come to this country every 10 years. Where's the houses, the schools, the roads, the hostels that these people are going to live and work in? Who's building those? That's why you're seeing the states make those changes that are necessary.

And the federal government, as it always does, eventually will step up to the plate. And what we're doing is trying to get the federal government, as part of other members of the association, to do that.

But with regard to 2015, we've just to the Highway Trust Fund funding the 11 billion transferred in for next year; we've just got the extension to May next year, we continue on our work. But as soon as we know something, we will tell you.

With regard to the portfolio, your rate of interest point, I just want to clarify; we're not an asset manager of businesses. We're an industrial Group that manages a broad diversified portfolio of businesses selling into the building material sector. That's what we do. We just happen to do so with one eye on the portfolio, and actively manage the portfolio in a disciplined capital way.

And in doing that, in setting out our portfolio, we were very clear earlier this year, there are a number of businesses that we are selling that are actually good businesses; they just don't fit with CRH.

There are many good businesses that do not have the capability to step up in size and scale, but we can leverage the strength of that, as we spoke earlier. So they are good businesses, we're just the wrong parent for them. And we will dispose of those businesses in time, as we find the right prices for them.

So your comment is are we only selling bad or difficult businesses? No, it's not, because as we step out in our portfolio no one ever bats 1,000; no one ever gets 10 out of 10. There are businesses we step out into that are good businesses. And, in fact, if you look through the disposals over the last three or four years, you'll see we had some very good disposals of some fine businesses, but again we were just the wrong parent for them. I think that will continue to be the case.

Maeve, more specifics on Ukraine?

Ukraine, the operating profit last year was in the region of EUR18 million. So there is a -- I think, as we said earlier, our expectation for the full year this year, even though we're well ahead in the first half of the year, is for the overall profits likely to be the same as last year, in spite of the benefit of Mykolaiv coming in.

EBITDA in the region of EUR30 million.

I want to get to the wires. Have we any other questions from the floor here today? Will?

Sorry, just a couple from me, if I could, please. On the net debt, I think last year the inflow was about EUR1.2 billion half to full year, are you thinking a similar profile this time around? Obviously, probably slightly higher profits, maybe slightly higher CapEx, but any thoughts around year-end net debt, please?

And then, the depreciation charge, I think, dropped EUR20 million first half on first half. Is that going to happen again in the second. And because you're spending less than depreciation this year, should we expect that depreciation drops again in 2015?

If I deal with the depreciation first, the charge for 20 -- the first half of the year has dropped by about EUR20 million. Part of that is the non-depreciation of those assets, which were impaired at the end of last year. There was about EUR275 million of the impairment charge related to plant and equipment last year, so, having written those down, the depreciation charge reduces.

And then there's also some exchange impacts also, with the US dollar primarily; US dollar-denominated depreciation costing us a little bit less in the first half.

So both of those effects will flow through into the second half of the year, so we would expect the full-year depreciation charge to be somewhere in the region of twice the first-half number.

In relation to net debt and the movements, that seasonal effect that I talked about in terms of the cash flows for the half year, with the buildup of net debt to the half year, as we build up to gear up for the level of activity, that traditionally reverses significantly in the second half of the year and there's usually a swing of somewhere between EUR0.5 billion, EUR600 million/EUR700 million of inflows in relation to operating cash in that second half of the period.

So we would expect the net debt, absent further acquisitions, and absent any major divestments, which are obviously harder to factor into an equation, to be lower than last year.

Thanks, Maeve. I'm just conscious of our time; I know there are people on the telephone and on the wire, as well. Maybe we could take our first call from the telephone, please.

Yassine Touahri.

So, a couple of questions. First, on organic growth, so you discussed about organic growth in the first four months of the year in the US, and also in Europe. Could you give us the figure for May and June? I think you told us it was flat to slightly down in Europe; could you quantify? And what was it in the US?

And also, a question about the flow through. I'm not sure I understand the 25% of flow through that you're discussing in H1. Perhaps, I'm doing my calculation wrong, but when I do the increase in EBITDA in H1, divided by the increase in sales I come up with a flow through of 34%. So if you could explain how you come to your 25% flow through, that would be very helpful.

And [that's all for the time being]; that would be my two questions.

Okay, maybe I'll answer the first question; partly answer the second question, and then let Maeve give her comments on it.

With regard to the organic growth, what we have said in May and June, and continuing in June and July, we see the European business flat to minus 1%. That specifically will be a range across all our businesses, maybe recovering back a little bit better now during the month of July and August. So that's broadly flat.

I think it will really be September/October, and we see [the delivery] of those months because May -- July and August are difficult months in Europe to call construction. A lot of people are on vacation, activity levels actually drop down to seasonal lows, so it's hard to get a run through. But our sense, in looking at our order books, our sense in talking to our customers, is that it will be broadly flat for the remainder of the year, against what was a very good finish to 2013.

In the United States, the indications that we've shown in our presentation this morning of this good growth we've seen, both in May and June, and we're saying and confirming to you that continuing on now in July, and indeed in August, we see that continuing because all the indicators tell us that they are, in terms of our order books, and indeed the margins in those order books.

Before I pass the question on leverage of flow through over to Maeve, I suppose the one point I would make on that is that where you see with high fixed-cost businesses that normally have a high contribution per unit coming through, we see more volume coming through those businesses. Obviously, they are the ones with the higher flow through, as you call it, the higher operational leverage coming through. So it's very specific to the business.

So we get a very different operational leverage coming through with our distribution businesses, as we do with our heavy side aggregates businesses, concrete businesses, and cement businesses, and that's the big input.

But with regard to the actual specific numbers, you've dealt with it already, Maeve, but maybe just for the people that haven't heard it.

And just to follow on, on Albert's point there, in the first half of the year the significant part of that flow through came in our Europe business, and in particular in our Europe material business, which saw margins almost double in the first half of the year. So that fixed point being very obvious there.

The 25% you have seen that we were talking about is on -- is the organic improvement. So it's an improvement of EUR99 million in organic EBITDA, and that means excluding exchange impacts, and also excluding the impact of acquisitions, and also excluding the impact of one-off restructuring costs which can distort the numbers a little bit.

So it's the underlying improvement and operating profit, just on approximately EUR99 million, on the equivalent underlying increase in sales, which is just under EUR400 million. So [that actually is] the 25% that we've been talking about. Those numbers are on slide 12 of the presentation, if you'd like to look through them.

Particularly on -- your mentioning -- when you're mentioning --

Another call, please?

Robert Eason.

Goodbody. Just a few questions. If I can push you a bit more on the working capital, after the strong performance in the first half, can we expect there to be actually a working capital inflow for the full year as the working capital unwinds in the second half?

And is there something that you're doing structurally behind the scenes on working capital to improve the metrics on that front? If so, can you just give us a bit more flavor on that?

Just on the financial charge, can you just give us a bit of guidance what we should expect for the full year for the financial charge?

And just in relation to your asphalt operations in the US, can you just give us a bit more detail on bitumen costs, and your winter storage, and, as a result, your expectations for that input cost in terms of a year-on-year change?

If you take the first two, and I'll come back on the asphalt one.

If I talk about the working capital first, Robert, last year we had an inflow in working capital of EUR118 million. I think -- and that reflected some good efforts by CRH. And, obviously, what we had at the first half of the year was a reduction in the seasonal outflow, so a strong performance.

As I was saying as I was chatting through the presentation, that is not delivered by any magic formula; that's delivered by really hard work right across our 3,600 locations, where we just focus on the basics of running the business -- of managing working capital well. And that starts with credit control, and it's in -- you have to pay attention to inventory, values and managing inventory well.

One of the things that has been really gratifying right through the last number of years is that with that focus on the detail and the fundamentals of managing our businesses well, we have seen no deterioration in our working capital statistics. So we have not seen any significant increase in the level of bad debt experience.

Also, we have seen things the things we measure every day, like days sales outstanding, days payable outstanding, stock turnover, we've actually seen improvements in both the receivables and payables side of that equation, and we've found it harder to move the needle on inventory. But, having said that, our inventory metrics did not reduce either during that period.

So we think that's really a testament to that good day-to-day management. So I've no magic bullet to talk to about that, but just a good, basic, honest-to-God financial management at its best.

I think for the year as a whole, the outturn at the end of the year, it's one of the things that we find hardest to predict for the Group as a whole. It's very sensitive to trading in the last month, or six weeks of the year.

So last year, you'll remember, we had a very good finish to the year, particularly in Europe, and that meant activity was strong just in those last few weeks. Depending on how things work at the end of the year that will have an impact on the final outturn.

In reality, though, I'll be very happy if we're reporting a small outflow in working capital for the year as a whole, because that will mean that activity has picked up and this trend that we're seeing is continuing even stronger.

So I can't predict the exact answer, but I don't think the number will be a big figure in the cash flow for the year as a whole, which means I'm confidently expecting a significant inflow from working capital in the second half of the year.

And the finance charge, it was approximately EUR150 million for the first half of the year. I'd expect that to be slightly lower in the second half of the year. So a number for the year as a whole, slightly below last year's EUR300 million, so somewhere in the EUR290 million, EUR295 million for the year as a whole.

Thanks, Maeve. And specifically, Robert, with regard to your question on asphalt volumes and pricing costs, and, indeed, margin, as we said earlier, the 3% volume increase we've seen in the first half of the year was very strong. I don't think it will be maintained at that level.

I think there's some possibility we will see margin volumes up this year on last year on the back of growing residential, non-residential, and specifically on the fact that we're seeing a little bit of more state spending coming through to support that business. But we'll see how the year pans out.

With regard to our winter-fill program, just to remind people who are listening in, or who are in the room, we stock, we store at the end of the winter season about 860,000 tonnes of bitumen in our winter storage, which is a pearl necklace all across the north of America.

This is very expensive for us to do; it costs $600 a tonne to do that. It's at just a touch below last year's costs. And we think that what we have in the tanks, and given what the rack price is, at this moment in time in the marketplace, will support our asphalt margins this year. So I hope that's clear for you, Robert.

Yes. Sorry, could I just have one follow-up question? Just in relation to slide 25, where you outline your equity account as investments, can you give us the full-year EBITDA figure for 2013?

I'm going to give you a number, I think it was around EUR160 million for 2013. I'll check that, Robert, and come back to you if I'm wrong with that. The operating -- the PAT number for equity accounted-number at the end of last year, excluding impairments, was EUR61 million. I think it was around the EUR160 million mark at EBITDA.

I think you're right. I think you're right.

Okay, thank you.

I think one more question. I've got some questions on the web we want to get to. I'm just running a little bit tight on time. Maybe I can take one more question from the telephones, please.

Gerard Moore, Investec.

I've just got one quick question, and that relates to the Americas materials business, and, more specifically, the paving business within there. I was wondering if you could give us an indication of how significant was the improvement in the margin in that business? And where would margins be now compared to normalized levels, or what this business should be achieving? Thanks.

We saw a good uptick in the overall activity levels for our construction business, and margins slightly ahead, but only slightly ahead of last year. And we're not back to where we are, we're back to about 70% of where they were pre-crisis, but uptick on last year, as such, in terms of our construction margins in the US in our paving business.

Thank you.

Okay? I'm just conscious of our time here. And what I'm going to do is we had a number of questions come in from the web, some of which -- one of which, I didn't -- I failed to answer Barry's. Barry Dixon from Davy asked me a question on the outlook for Poland. One on the -- which I've been asked, to update on Polish infrastructure spending, and where that is given last year.

With regard to that, we have -- any of the growth this year we're seeing in Poland is largely coming through on the back of better residential spend.

The EU funding that's in place now from 2013 to 2020 commits about EUR17.6 billion of EU funds, which will have to matched 50/50 by the Polish Government out in particular projects, road projects, infrastructure projects. They have been very slow to get those tenders awarded.

There's a lot of tenders out there. In this current year, we estimate, on a current rolling 12 months, about EUR1 billion work will actually take place. So there's significant amount of work that's still out there. And I should say because of the bureaucracy and the red tape, and because of funding constraints that Poland had but no longer has, they actually left about 25% of funding from the previous tranche behind them.

So we think it bodes well. I think it's getting better. I think people have learned some of the lessons from the last bidding wars that were out there. There's a lot of tenders that are out there that seems to be a lot more sensible, and we think it bodes well, but it will be more 2015 than 2014.

I was also asked to comment on the capacity in India, and the fact that in recent times, there was some publicity in Andhra Pradesh, where our businesses are located, on capacity reductions in India.

And we would have seen that last week whereby there were some reports, I think about India Cement in particular, whereby they were reducing capacity in India in response to the overcapacity in that market. And we saw that, and we see that in the marketplace, but that is just a natural evolution of old cement capacity being taken out of the marketplace because it's too high cost.

There's significant overcapacity in India. The overall capacity in India is about 350 million tonnes, the demand is about 260 million, 270 million tonnes. And, in fact, that capacity's going to increase by about 40 million tonnes over the next three years so the gap is actually going to widen because the market's only growing at about 5% or 7%.

So what you see is, effectively, the survival of the fittest. The high-cost producers are having to close down and shut down; that's what's been closed.

In fact, our business in India, you may recall, we invested in a business called Sree Jaya Jothi, which added on another cement plant to our Mellacheruvu plant. So our volumes, in fact, in Andhra Pradesh and Southern India will go up this year, up to about 5.3 million tonnes of sales, from about 3.8 million tonnes last year.

One question on -- just a comment on what's driving the strength of our building materials business in Switzerland. I think I said that earlier on; it's as a result of very strong residential and particularly strong infrastructure work in the region where we are in Switzerland.

It's quite regional-specific. Our businesses service effectively Zurich, North, and North Eastern parts -- North Western part of Switzerland. That's specific to us. And what we're seeing is the dynamic in that particular part of Switzerland that's driving the good volume growth for us this year, although prices are weak in Switzerland on the back of a strong Swiss franc.

The last comment we had was could we please update on the Lemona acquisition, and how trading is going in Spain?

Lemona, you may recall, was a cement business that we swapped with Cementos Portland Valderrivas when we exited our equity stake in Uniland about 18 months, or so. We have this year started to put volume through that plant. We've plugged it into our network very well. We're shipping about 300,000 tonnes out of Spain into the United Kingdom here, and into our businesses in Belgium.

And that business is performing in line with expectations and reasonably well. I should say the prices in that part of Spain are probably the best part of Spain as well, so it's held up quite well.

And my overall comment on Spain is that Spanish cement volumes are down again this year. We don't have huge exposure to it because we knew what we were buying when we bought Lemona, which is effectively an export business for the next five years.

And I think Spanish cement probably be about 10.5 million tonnes this year, which, when you consider what is probably a normalized level of surely about 25 million tonnes going forward.

But we do see some signs of life and recovery coming back into those markets in time. Spain is too strong an economy to be at a 10 million tonne cement market for construction levels, where it is, and I think they're making some of the structural reforms there that will facilitate and allow that growth to come through.

That's generally all the questions that we have from the web, I think from the telephones. If there are no further questions from the floor, I'm going to bring proceedings to close.

I want to thank you for your attention this morning, and look forward to updating you in November with our IMS, and with the half-year results. Thank you.