2015 INTERIM RESULTS
OVERVIEW
The Group had a good start to 2015, with continued positive momentum in the Americas combined with a more mixed experience in Europe. Our Americas operations started the year well, with the benefit of more normal weather patterns in most markets compared with the prolonged winter conditions in the first half of 2014, and the business and economic environment remains upbeat. In Europe, against the backdrop of challenging prior year comparatives, which benefited from particularly mild weather conditions in the early part of 2014, underlying results were broadly in line.
Reported sales of €9.4 billion for the period were 13% ahead of 2014. On a continuing operations basis, excluding the impact of divestments and with the benefit of positive currency impacts, sales were 17% higher than 2014; an increase of 32% in the Americas reflected the continued positive momentum, while sales from continuing operations in Europe were 3% ahead of last year.
Margins and Returns
The first half saw a €50 million increase in EBITDA to €555 million. On a continuing operations basis, excluding the impact of divestments and one-off items, EBITDA was 29% higher than 2014 (see page 11), reflecting strong operating leverage. EBITDA/sales margins for the continuing operations improved in all six operating divisions, another step forward in our commitment to restore margins and returns to peak in the current cycle.
In the Americas, an improving economic backdrop and more normal weather patterns resulted in robust demand in residential and non-residential markets while the infrastructure market remained broadly stable. In Europe, against a backdrop of mixed market conditions, and with the benefits of our profit improvement initiatives, margins improved in the continuing operations of all three business divisions.
Profit Improvement Programme
Our ongoing cost reduction programme continues to focus on improving the Group's cost base with incremental savings of €28 million delivered in the first half of 2015. We remain on track to deliver €75 million for 2015. Costs incurred in implementing the savings amounted to €14 million (H1 2014: €9 million) in the first half.
Operating Profit and EPS
After depreciation and amortisation charges of €366 million (H1 2014: €334 million), first half operating profit (EBIT) amounted to €189 million (H1 2014: €171 million).
Net finance costs for the period amounted to €199 million (H1 2014: €150 million), including a cost of €38 million for the early redemption of a portion of the US$ bonds maturing in 2016. The early redemption results in overall net interest savings for the Group in 2015 and 2016. First half profit before tax was €63 million, compared with a profit of €61 million in 2014.
The interim tax charge has been estimated, as in prior years, based on current expectations of the full-year tax charge. Earnings per share for the period amounted to 5.7c (H1 2014: 6.1c), with the increase in weighted average number of shares in issue to 802.8m (H1 2014: 735.4m) reflecting the placing of c.74 million shares in February. Excluding the impact of the provision of €32 million relating to a fine imposed by the Swiss Competition Commission (see note 15 on page 29) and the €38 million bond redemption charge, adjusted first half EPS was 12.2c.
Note 2 on page 18 analyses the key components of first half 2015 performance.
DIVIDEND
The Board has decided to maintain the 2015 interim dividend at last year's level of 18.5c per share. It is proposed to pay the interim dividend on 6 November 2015 to shareholders registered at the close of business on 11 September 2015. A scrip dividend alternative will be offered to shareholders.
