CRH will continue to grow via acquisitions after thriving through the Covid storm

The building materials group has been remarkably unscathed by the global pandemic, with earnings rising 5% to $4.6bn

Group chief executive Albert Manifold said CRH’s acquisition model is not broken and that further bolt-on purchases are central to its growth strategy. Shane O'Neill / Fennells

Building materials giant CRH is prepared to spend big on acquisitions and return more cash to shareholders this year after coming through the mess that was 2020 remarkably unscathed and with a strengthened balance sheet.

CRH weathered the Covid storm remarkably well, last year, with earnings rising 5% to $4.6bn (€3.8bn) and group revenues only falling by 2% to $27.6bn. Pre-tax profit fell from $2.2bn to $1.7bn.

The group closed 2020 with total liquidity of $12.1bn — comprising $7.7bn in cash and $4.4bn in undrawn lending. Net debt reduced from $7.5bn to $5.9bn.

Announcing its annual results, CRH recommended a final dividend of 93c per share for last year, resulting in a total shareholder dividend for the year of 115c per share.

Share buyback will restart

It also said it will recommence its share buyback programme — after having paused it due to market volatility last year — and plans to return a further $300m of cash by the end of June. CRH returned €220m to investors, via its ongoing share buyback programme, during 2020.

The group's share price rose by over 2% on its results, with the stock trading higher than before the onset of the Covid crisis last year.

It said its strong balance sheet allows it room to capitalise on what it called a “strong acquisition pipeline” with “significant opportunities” within its main markets of Europe and the US.

Group chief executive Albert Manifold said CRH’s acquisition model is not broken and further bolt-on purchases will remain central to its growth strategy.

No rush into new deals

Despite strong cash generation of $3.9bn and speculation that it may now look for bigger than usual acquisition targets, Mr Manifold said CRH sees “no need” for landmark deals and is in "no mad rush" to embark on deals.

He said the company is just as capable of buying in the €500m-€1bn price range as it is in the €10m-€20m bracket, but said it would be unlikely to make a huge €5bn transaction.

In terms of geography, Mr Manifold suggested any acquisition focus would remain on the core markets of the US and Europe, where he said there exist “lots of opportunities”. Last year saw CRH spend more than €400m on 17 acquisitions.

Boosts in both Europe and US

CRH called its 2020 performance “robust in a challenging environment”. It was helped by a relative recovery in its Europe Materials division in the second half and a jump in sales in its Building Products division, driven by strong residential repair, maintenance, and improvement activity in North America.

Mr Manifold said anticipated strong economic stimulus plans, coming down the line across the US and Europe, should drive some form of construction recovery this year.

Well positioned for growth

"Although the near-term outlook remains uncertain, our unique portfolio of businesses, together with the strength of our balance sheet, leaves us well positioned to capitalise on the growth opportunities that lie ahead," he said.

He said CRH's "significant exposure" to growing economies in eastern Europe and strong, stable markets in western Europe will help its recovery.