Higher prices boost building group CRH as shares jump 4%

CRH chief executive Albert Manifold. Picture: Gary O' Neill

Irish building materials group CRH said it expects its earnings to grow by 10% this year as it increased prices by double-digit percentages.

Shares for the world's second-largest building materials supplier jumped 4% after it posted positive earnings in its statement for the first half of the year, despite inflation and geopolitical headwinds.

“In my time, I’ve never seen such a significant increase in costs over such a short period of time,” said the company's chief executive Albert Manifold.

Mr Manifold said it is uncertain if there will be any further price increases this year as it is still unclear when costs will peak.

In Europe, the largest price increase by CRH was for cement, which went up 21% despite volume falling 7%.

However, he said that battling current headwinds “isn’t just a question of passing on costs” but introducing other cost-saving measures such as using sustainable fuel.

The company said its energy costs across the whole sector rose by 50% compared to the previous year.

CRH posted revenue of €15bn for the first six months, a 14% increase compared to the same period last year “despite a challenging and volatile cost environment”. 

This performance reflects the continued execution of our integrated and sustainable solutions strategy,” said Mr Manifold. 

Core earnings also climbed 13% to over €2bn and are expected to increase further to €5.5bn, "assuming normal weather patterns for the remainder of the year and absent any major dislocations in the macroeconomic environment", said CRH.

Ukraine impact

The US and eastern Europe remain CRH’s biggest markets. 

The company said activity levels in Ukraine were negatively impacted by the ongoing Russian invasion of the country. However, overall operating profit in eastern Europe was ahead of 2021 as “strong pricing across all markets more than offset inflationary pressures”.

CRH pulled operations out of Russia earlier this year and told reporters it would not be going back into the country.

The Dublin-headquartered company also said there is still a strong residential market in the US, despite rising interest rates, which will help boost business further this year. It also said it has several deals in the pipeline which will help to grow earnings.

The company spent €2.8bn on acquisitions in the past year, including on US fencing company Barrette Outdoor Living.

Other markets were not as successful for CRH. Sales in the Philippines were behind 2021 levels due to impacts caused by a pre-election ban on construction and a post-election transition of government.

The company’s board increased the interim dividend to 24.0c per share, which is 4% higher compared to the same period last year.

“Looking ahead, despite some continued cost headwinds, the strength of our balance sheet and resilience of our business leaves us well positioned to deliver superior value for all our stakeholders,’’ said Mr Manifold.