February 26, 2013 10:12 am

CRH chief to step down

Myles Lee

CRH’s chief executive is to retire at the end of 2013, the FTSE 100 building materials group said on Tuesday as it reported a dip in annual profits amid tough trading conditions in Europe and the US.

Pre-tax profits at the Irish group fell 5 per cent to €674m last year as Europe’s economy faltered and CRH faced disruption in the US following Hurricane Sandy.

Myles Lee, CRH chief executive, said he expected the company to achieve progress in 2013 as the US economy improved.

“We expect that ongoing improvements in our businesses in the Americas combined with further profit improvement initiatives throughout our operations will outweigh continuing trading pressures in our European segment,” he said.

Mr Lee, who joined CRH in 1982 and has served as chief executive for four years, will retire at the end of the year when he turns 60. The board of CRH has appointed a committee to find a successor.

Despite the difficult global economy, sales at the group increased by 3 per cent to €18.7bn in 2012. Earnings before interest, tax, depreciation and amortisation were €1.64bn, a 1 per cent fall on 2011, although ahead of the company’s guidance last November.

The CRH board is recommending a final dividend of 44 cents per share, in line with the final dividend for 2011. This gives a total dividend of 62.5 cents for the year, in line with 2011.

CRH is a bellwether that is feeling the impact of a slowdown in worldwide construction. The company said it was continuing to cut costs and restructure to cope with continued weakness in the European market.

It also said it had reached an asset swap agreement with Spanish group Cementos Portland Valderrivas, under which the Dublin-based group would transfer its 26 per cent stake in Corporación Uniland, another Spanish building materials group, to CPV. In return, CPV will transfer its 99 per cent stake in a Bilbao-based company Cementos Lemona to CRH. CRH will acquire Southern Cement Limited, a business based in Ipswich as part of the transaction.

Dublin-based stockbroker NCB said Albert Manifold, CRH chief operating officer, was the likely successor to Mr Lee. “This would be perceived positively by the market,” it said in a note.

Mr Manifold joined CRH in 1998 after a period spent working in private equity. He is the first person at CRH to hold the position of chief operating officer. He has previously held the role of finance director of CRH Europe materials division and group development director.

Mr Lee said the group had a good tradition of growing talent and promoting internally but the decision on a successor was one for the committee.

“I think we have strong talent across the group – we have a very strong bench,” he said.

He added that the carrying value of Cementos Lemona was about €150m. CRH had written down the value of its stake in Uniland by €146m in its 2012 results.

Mr Lee said the political instability in Italy showed the eurozone crisis had not gone away. “There is a risk that this could push companies back into their box again in relation to spending plans,” he said.

“The last thing business or governments need is a resurgence of the type of anxiety we saw in early 2012.”

See Lombard

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