August 20, 2013 / 6:32 AM / 5 years ago

WRAPUP 1-Building suppliers' moderate outlook hits shares

* CRH warns on profit, sees Europe better in 6-12 months

* Wienerberger sees better H2 in Europe, confirms outlook

* CRH shares down 5.8 pct, Wienerberger down 3.6 pct (Wraps Wienerberger and CRH results, updates shares, adds analyst comment)

By Georgina Prodhan and Padraic Halpin

VIENNA/DUBLIN, Aug 20 (Reuters) - Two major European building suppliers said on Tuesday they saw only gradual stabilisation in Europe, disappointing markets that had expected better news given recent positive economic data.

Wienerberger, the world’s largest brickmaker, said construction activity in its major markets of France, Benelux and eastern Europe was lagging the United States and Britain, and Ireland’s CRH cut its full-year earnings outlook.

Both said the second half of the year should be better than the first, which was blighted by a long winter and early summer floods, resulting in second-quarter earnings that fell short of expectations at the two companies.

CRH profits missed forecasts and the company said it now expected second-half core earnings only in line with last year‘s, not higher, after identifying extra savings on top of an already aggressive programme. Wienerberger’s 8 percent rise in operating profit also missed estimates of analysts polled by Reuters.

Shares in Austria’s Wienerberger fell 3.6 percent to 10.98 euros by 0903 GMT, and CRH shares dropped 5.8 percent to 15.83 euros, helping to drag the European construction index down 2.4 percent in generally weaker markets.

Shares in Wienerberger had risen 25 percent until Monday’s close from a low point in July, when it warned that an expected rebound had failed to materialise. Over the same period CRH shares rose 9 percent as some economic gloom receded.

“Wienerberger shares have had a very strong run. In my opinion, too many hopes were already priced in. Of course they were also below expectations on the EBIT level,” said analyst Franz Hoerl of Erste Bank.

“There is a recovery but it is still a long way until the company really earns proper money again.”


Last week, Germany and France said their economies had grown faster than expected in the second quarter, outpacing the United States and pulling the euro zone out of a one-and-a-half-year-long recession.

Asked about that data, CRH Chief Financial Officer Maeve Carton told Reuters: “We can’t say we’ve seen any of the benefits of that yet... What we have seen is some moderation in the rate of decline.”

“Our sense would be that the markets are going to stay challenging for the rest of this year,” she added, chiming with Wienerberger’s expectation of a “continuing difficult market environment” for the European brick business this year.

CRH splits its revenues roughly evenly between Europe and the United States, where it is the leading producer of asphalt for highway construction. Wienerberger is 90 percent dependent on Europe.

The United States and Britain are seeing a pickup in construction of new homes, although that recovery is hampered by the lack of skilled Mexican labour in the U.S. case and Polish labour in Britain after an exit during the recession, Wienerberger said.

Both CRH and Wienerberger expressed cautious optimism about improvement in their markets in the second half of the year or early 2014. Wienerberger called for the urgent reinstatement of public housing projects to stimulate European economies.

CRH Chief Operating Officer Albert Manifold said: “I do think there’s room to be positive going forward. We’re seeing growth in the U.S. and hopefully we’ll see a stabilisation in Europe in the next 6-12 months.”

Meantime, CRH identified a further 60 million euros ($80 million) of cost cuts, primarily focused on restructuring and closing businesses in Europe, on top of the 125 million already targeted for the year. The company’s annual savings through cost cuts total 2.3 billion euros since 2007. ($1 = 0.7490 euros) (Editing by Sophie Walker)

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