CRH Annual Report 2007 PERFORMANCE AND GROWTH

Improved economic conditions together with profit enhancementinitiatives led to strong performance across all businesses. Operatingmargins advanced and an active development programme includedthe doubling of our Swiss distribution activities.brands: Gamma (The Netherlandsand Belgium), Karwei (TheNetherlands), Hagebau (Germany),Maxmat (Portugal) and BricoHouse(Spain).The Netherlands: After some flatyears, 2007 saw a healthy increasein the total DIY market underpinnedby increasing consumer confidence.The mild winter and sunny springperiod resulted in a very successfulgarden season, while goodpromotional campaigns and sharpformula management resulted in anincrease in market share. Organicsales and profit advanced strongly.In addition, two stores were addedfrom one acquisition, and threegreenfield stores were opened.Belgium: Gamma Belgium showeda healthy increase in both sales andprofits but, in the absence of newgreenfield store openings, marketshare declined.Germany: Bauking operates 54DIY stores under the brand nameHagebau. In a very competitivemarket which was depressed by theeffect of the VAT increase, Bauking’sHagebau stores reported sales andprofits in line with 2006. From twoacquisitions Bauking added 14Hagebau stores bringing its totalnetwork to 140 stores.Maxgarden concept. Start-up lossesfor the new openings resulted inlower profits than in 2006.Spain: We entered the SpanishDIY market in May 2007 withthe acquisition of a 60% interestin a small business in theAlicante/Valencia region.OutlookCurrent forecasts for our Europeanconstruction markets are for aslower pace of growth than in 2007.In the Netherlands, we expectthe residential and non-residentialsectors to be stable in 2008. InBelgium after several years of stronggrowth, the market is expected tovary somewhat by segment, witha slower new residential market,growth in non-residential spend anda stable infrastructure sector.While we anticipate a slowdown inthe new non-residential sector inFrance the residential markets areexpected to remain stable.After a long downturn, 2006 and2007 saw the start of a modestrecovery in overall Germanconstruction activity. Although theresidential sector remains weak,we expect that non-residential andinfrastructure will continue growthinto 2008.Swiss construction output isanticipated to grow at a moderatepace in 2008 with a slight decreasein the new housing sector morethan offset by a positive nonresidentialoutlook.In the UK despite recent reductionsin interest rates, we expect themore cautious lending environmentgenerally to dampen 2008 demandwith the exception of nonresidential,which is expected toremain relatively stable.Strong growth is expected inEastern Europe, with the currentrobust climate in Poland expectedto continue. Strong but moremoderate growth is still expectedin Slovakia and we see a positiveoutlook to our newly acquiredRomanian concrete operations.The growth we have experiencedin our Scandinavian businesseswill be tempered somewhat by theslowdown in Danish new housing,but overall we consider the outlookfor these markets to be positive.Following successful delivery in2006 and 2007, ongoing marginimprovement through a combinationof price recovery and cost reductionremains the key focus of ourmanagement teams. The search foracquisition opportunities in Europeacross our full range of activitiescontinues. We look to furthersuccess on the operational anddevelopment front in 2008 leadingto further profit advances, despite asomewhat slower growth backdrop.Portugal: Despite generally weakeconomic conditions, like-forlikesales at Maxmat remained at2006 levels. With the lifting of legallimitations on new store openings,Maxmat greenfielded seven newstores in 2007 and introduced theIn May 2007 CRH aquired GétazRomang, the market leader inbuilding materials distributionin the French speaking part ofSwitzerland. Pictured is one ofGétaz’s branches in Daillens, asanitary ware distribution centre.CRH25