CRH is to dispose of between 10% and 30% of its subsidiary portfolio over the next few years; but also has the capacity to spend up to €1.5bn on fresh acquisitions over the coming 18 months.
Updating, yesterday, on the portfolio review it initially announced late last year, the Dublin-headquartered building materials giant said that 45 subsidiary companies — roughly 10% of its current asset base — have been identified for “orderly disposal”, while another 20% is to be reviewed for potential restructuring.
Group chief executive, Albert Manifold said that it is “most unlikely” that all of the additional 20% of assets will be sold.
Furthermore, management noted that as the businesses under review are not under-performing, but, merely deemed non-core, there is no firm timeframe on the disposal round. Management is likely to give greater detail on the matter in the second half of this year.
Maeve Carton, CRH’s finance director, said any proposed sales could take place over a three-year timeframe. She added that the group could absorb acquisition costs of up to €1.5bn over the next year and a half.
On the subject of fresh acquisitions, Mr Manifold was positive. CRH spent €720m on acquisitions and investments last year — over €100m more than it did during 2012 — and is likely to continue its outlay this year.
The Americas, mainland Europe and, to a lesser extent, emerging markets will remain the geographic focus, with Mr Manifold saying that market visibility — one of the impediments to making purchases in recent times — is getting clearer.
“We’ve spent around €1.6bn [on acquisitions and investments] over the past three years, seeing a return on investment of 11%. The more we spend, the more we make for shareholders,” he added, saying opportunities exist and the capacity to do deals is there.
“The review of our portfolio aims to reset the group for growth,” Mr Manifold, who succeeded Myles Lee as CEO this year, added.
“We believe that dynamic allocation and reallocation of resources to optimise the portfolio together with our traditional tight cost control and capital discipline and our relentless focus on returns will be key to driving growth and to rebuilding returns and margins over the coming years,” he said.
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