Concrete and cement specialist CRH eyes further growth

CRH shares rose nearly 2% at one point yesterday on the back of a strong trading update from the building materials company and an upbeat outlook for the second half of the year.

The concrete and cement specialist holds its AGM in Dún Laoghaire this morning.

Yesterday it reported a 9% year-on-year increase in group revenue for the first quarter of this year mainly driven by continued strong momentum in its Americas division.

First-quarter sales in Asia were 12% ahead of the corresponding period last year and the stabilisation seen across European markets towards the end of 2015 continued.

CRH expects first-half earnings from its European divisions to be up slightly on the first six months of 2015.

The first six months mark the seasonally less significant half of the year for the group but it still anticipates mid-single digit percentage earnings growth to around €1bn for the period.

In yesterday’s statement management said “in the absence of any major financial or energy market dislocations” it expects to continue to make progress, in earnings terms, in the second half of the year.

CRH spent around €8bn on investments and acquisitions last year, with the landmark €6.5bn payout for certain assets disposed of to cater for the merger of European peers Lafarge and Holcim dominating business.

Last month, at the publication of its 2015 annual results CRH’s management suggested that while this year’s spend levels are likely to be smaller, further spending on smaller bolt-on deals will continue.

The latest update noted that €85m was spent on acquisitions and investments — mainly relating to bolt-on buys in the Americas Materials division — in the first three months of 2016.

Coinciding with that, some €78m worth of non-core divestments were undertaken.

The group’s share price pared back slightly in later trading, closing yesterday ahead by 1.3% at €26.22.

Davy Stockbrokers noted the upbeat trading statement, saying that “we see little reason why, if this momentum is maintained, that the operating leverage demonstrated by the group last year cannot be repeated this year.”

“This, combined with ongoing benefits from acquisitions, provides scope for earnings upgrades as the year progresses,” it said.


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