CRH Delivers Solid First Half Performance
Impacted by severe and prolonged winter weather conditions early in the year, CRH plc has reported sales of €11.9 billion for the first half of 2018 – ahead by 1% on the same period last year and up 2% on a like-for-like basis. In Europe, like-for-like sales growth of 1% reflected continued recovery in some key markets, while volumes in certain countries did not fully recover by the end of the period, following the harsh early weather. In the Americas, like-for-like sales were 3% ahead of the first six months of 2017, despite less favourable weather conditions across certain regions. Like-for-like sales in Asia were 2% below the first half of 2017.
Overall EBITDA og €1.13 billion was 1% ahead of the first half of 2017. On a like-for-like basis, first half EBITDA for the Group was also 1% ahead, with Europe up 1% supported by modest price recovery in a number of major markets. In the Americas, like-for-like EBITDA was 3% ahead, reflecting volume growth and price improvements with regional variations. Like-for-like EBITDA in Asia was 59% below the first half of 2017 on the back of a very competitive trading environment and higher input costs. Despite the inflationary cost environment, with continued focus on performance across the businesses, margin remained in line with prior year at 9.5%.
During the first half of the year, CRH completed the acquisition of Ash Grove Cement Company for €2.85 billion, primarily funded by the divestment of its Americas Distribution business. In addition, 21 bolt-on acquisitions and two investment transactions were completed, resulting in a total development spend of about €3.24 billion (including deferred and contingent consideration in respect of prior year acquisitions).
On the divestment front, the Group completed the divestment of the Americas Distribution business in January 2018 and combined with a further six transactions, realised total business and asset disposal proceeds of €2.4 billion.
The Ash Grove acquisition gives CRH a market leadership position in the North American cement market for the first time, allowing for greater vertical integration with the Group’s existing aggregates, asphalt and ready mixed concrete businesses. Further to the acquisition of Ash Grove, CRH’s Americas Materials Division completed 15 bolt-on acquisitions and one investment throughout the United States and Canada for a total spend of about €265 million. The Americas Products Division also completed two bolt-on acquisitions in the first half of 2018, through the acquisition of a precast manufacturer in Utah and an architectural glass business operating in the South East of the US.
In Europe, four acquisitions and one investment with a total spend of around €80 million were completed. CRH’s Heavyside business completed two acquisitions in the United Kingdom and one investment in Poland. In the UK, CRH acquired a regional construction and surfacing contractor operating in South Wales, along with a ready mixed concrete business in the South West of England. CRH’s Lightside Division completed an acquisition in the UK and in Australia, complementing its existing operations in both countries.
Since 30 June 2018, CRH has completed seven bolt-on acquisitions for a total spend of about €150 million bringing total development spend to date in 2018 to about €3.4 billion.
Albert Manifold, Chief Executive of CRH, said: “We have had a good first half despite significant weather disruption in Europe and North America in the first quarter. Construction markets continued to recover and pricing gathered momentum in key European markets while there was solid volume and price growth against a positive economic backdrop in the Americas. Active portfolio management remains an important element of our ongoing strategic focus on capital allocation while integration of our recent acquisitions is progressing as planned.”
He added: “I am also pleased to report that the first phase of our share buyback programme has been completed, with €350 million returned to shareholders to date. In addition, the Board has decided to increase the interim dividend by 2.1% to 19.6c per share. For the second half of the year, despite continuing currency headwinds and challenging conditions in the Philippines, we expect an improvement in the momentum experienced in Europe in the first half of the year and further EBITDA growth in the Americas, which will result in another year of progress for the Group.”