Net Debt: Net debt declined to €4.8bn at the end of the first half, versus €5.1bn in June 2010, inline with the July trading update. This was as a result of a higher first-half working capital outflow and an adverse €0.5bn translation impact on debt.

Acquisitions: In the first half CRH completed 14 acquisitions mainly across its European and America Materials division at a total cost of €159m. Since the end of the first half the Group has made six additional transactions at a total cost of €86m. The Group acquired a 75% stake in a leading Belgian merchant SHAP business with nine branches across the East and West Flanders region. The Group continues to maintain a patient approach in progressing transactions in light of the challenging market backdrop.

Cost Savings: CRH remains on track to achieve further cost savings of €365m in FY2010, binging cumulative cost savings to €1.7bn since 2007. The total cost to implement these savings is expected to reach €325m with €298m spent to date.

Dividend: The interim dividend of 18.5c was maintained. We forecast a full-year dividend of 62.5c, in line with 2009, but given the weak outlook this may be under review.

Overall we will be cutting our forecasts significantly follow today's update from CRH. We expect 2010 EPS of approximately 70c (from 100c). Our EPS for 2011 of 130c will also be cut following the management meeting this morning. Our rating is under review pending a meeting with CRH later this morning.

Eoin Treacy's view CRH has suffered along with other construction related companies from the collapse in US and Irish building activity. Previously optimistic estimates regarding the outlook for its US business are now being reassessed in light of today's earnings report and the outlook for the share is uncertain. The decline in the share price indicates investors are sceptical that the dividend will be maintained.

CRH currently yields 5.3% with dividend cover of 1.36. It maintained the interim dividend in today's announcement but with a dividend of 62.5¢ against estimated full year earnings in the region of 70¢, the payout ratio is probably unsustainably high. Some improvement in trading conditions and/or a reduction in acquisitions would likely be required to offset potential for a lower payout. .

Prices are now down 67% from the 2007 peak and have almost halved since May alone. The share appears to reflect diverging opinions as to whether the US economy is about to move into recession or not. Clearly the price action has deteriorated considerably over the last few months and has accelerated in August. Even if, as seems likely, the dividend will be cut, there is room for a relief rally at this juncture.