CRH to extend spending spree
The Dublin-headquartered international cement and building materials giant is set to become one of the largest building suppliers in the world bought up some of the assets (mainly in Europe and the Americas) that had to be offloaded to allow for the merger of the aforementioned Swiss and French cement giants. CRH’s purchase will be voted upon by shareholders next month, but has already been called a game-changing deal for the Irish group.
Yesterday, CRH released its 2014 annual results, which showed that the group swung back into full-year profit after losses of €215m in 2013. Last year saw a pre-tax profit of €761m, with revenues growing by 5% to just under €19bn. EBITDA rose by 11% to €1.64bn and earnings per share of 78.9c compared favourably with a loss per share of 40.6c the previous year.
Profits were seen in all six of the group’s divisions. Net debt amounted to €2.5bn and the total dividend per share was maintained at 62.5c. Growth was more pronounced in the Americas businesses than in Europe, but the latter market is continuing to recover and management sees better years ahead.
However, chief executive Albert Manifold suggested the most important figure was the €900m cash inflow from operations which, after tax, interest, and capital expenditure payments illustrated “a well-run business”.
Mr Manifold said that the growth evident in 2014 was not just down to improving markets but also a significant amount of “self-help” work carried out on the overall business by management. Supporting this theory, Mr Manifold noted that management has typically been selling assets at around 11 times EBITDA and buying others at only around seven or eight times.
CRH finance director Maeve Carton said the group is making good progress on its non-core divestment programme, which was announced last year as a €1.5bn-€2bn three-year sale asset programme. As of the end of 2014, almost €350m of assets had been sold, with that figure due to increase to over €920m by the middle of this year.
Regarding potential additional acquisition movement beyond the proposed Holcim/Lafarge deal, Ms Carton said CRH’s growth has always been about making small- to medium-sized purchases, with that policy being in the company’s DNA. She said the near €200m spent on more than 20 transactions in 2014 will likely be followed up on this year; with there being a good pipeline of medium-sized deals in the pipeline.
Mr Manifold said 2014 represented a year of strong strategic, operational, and financial progress for the group.
“We’re able to use the underlying strength of our business to capitalise on the recovering markets and deliver a return to profit and margin growth,” he said. “With further improvements expected in market conditions across our main geographies, together with easing commodity prices, the benefits of cost efficiencies and a favourable exchange translation effect, we expect 2015 to be another year of progress.”
Management also said it remains happy with its Dublin share listing, as it allows European investors the choice of buying into the company in either euro or sterling. Davy Stockbrokers yesterday suggested that CRH’s results reflect the ongoing impact of structural improvements in the business, but added that it does not think these improvements are reflected in the current share price, which was hovering around the €25 mark in Dublin and the £18 mark in London, yesterday.
Davy also noted the group’s “strong cash and balance sheet dynamics”, which “will support growth through investment”.
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