CRH to build €7bn warchest

Geoff Percival

CRH is looking to generate €7bn in cash, before asset disposals, over the next four years which it may use to fund acquisitions, increase dividends, or buy back more shares.

CRH to build €7bn warchest

Currency headwinds and severe weather disruption in the early part of the year meant the building materials giant only grew revenues by 1% in the first half of the year to €11.94bn, with earnings — on an EBITDA basis — also up 1% at €1.13bn and pre-tax profit up 5% at €497m.

There were mixed performances from CRH’s main divisions in Europe and the Americas, but the only real major dents were seen in the Europe distribution business, where revenues fell 2%, and Asia, where the struggling Philippines business saw revenues tumble 16%.

Chief executive Albert Manifold said the ongoing review of the Europe distribution unit would likely continue into 2019, while he said there is “light at the end of the tunnel” in the Philippines, with a pick-up in demand boosting profitability hopes. In all, CRH has spent €3.4bn on acquisitions and investments so far this year. While its acquisition pipeline remains healthy, management said it would be patient around further buys and sees the remainder of the year more as a period for consolidating recent buys, including its $3.5bn takeover of US cement producer Ash Grove.

The second phase of CRH’s €1bn share buyback programme will commence shortly, Mr Manifold said. To date €350m has been returned to shareholders under the programme.

CRH’s outlook for the full year remained positive, with management saying it continues to expect “another year of progress”.

“The first half had many headwinds that are unlikely to re-occur over the next year, setting the group up well to report even stronger earnings growth over the next 12 months,” said Merrion analyst Darren McKinley.”

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