CRH aims to increase China stake as €18bn sales beat expectations
Published 29/02/2012 | 05:00
CRH wants to diversify its interests in China and will soon move to boost its existing stake in a cement manufacturer there to 49pc, CRH chief executive Myles Lee said yesterday.
Speaking to the Irish Independent yesterday, Mr Lee said CRH is keen to initiate discussions "promptly" about raising its 23pc holding in the Jilin Yatai group.
A window for acquiring that additional stake opens next year, but Mr Lee said that negotiations could get under way prior to that. They would take some months to complete. CRH paid about €200m to buy into Jilin Yatai in 2008.
Mr Lee also said that while CRH's European products division sells some small positions in China, it is now looking at expanding that presence to aggregates and other downstream products.
The company has significant spending power in its financial arsenal. Having spent €610m on acquisitions last year, it has already indicated that it could spend as much as €1.5bn on acquisitions in the next 12 to 18 months.
The CRH boss was speaking as the group reported better than expected results for 2011, helped by a more benign meteorological end to the year in both Europe and the United States.
Sales rose 5pc to almost €18.1bn, while operating profit was 25pc higher at €871m. Pre-tax profit climbed 33pc to €711m.
The results were better than anticipated by the company when it provided an update to the market last November. Restructuring has also helped it to deliver.
About €2bn in costs have been removed from the business since 2007, and 40pc of that is permanent, said CRH. Last year, €154m in costs were removed.
In Europe, CRH said markets in Portugal and Spain contracted sharply, while in Ireland cement volumes declined 16pc.
Poland, Switzerland and Finland performed strongly overall in 2011 on the materials side. The Netherlands suffered to an extent as consumer confidence flagged.
In the United States, the company faced "considerable challenges" in 2011, due to energy cost increases and pricing pressure.
Overall earnings before interest, tax, depreciation and amortisation in US dollars was down 2pc in 2011 in its Americas materials division, while operating profit was 4pc lower.
But Mr Lee said he was optimistic about the US market, with some decent economic data having emerged from there recently. He also remained upbeat on the current bill related to US highway funding which is still churning its way through the political system in Washington.
Revenue growth this year for CRH will be driven by price rises. Bloxham Stockbrokers described the outlook from CRH as "reassuring". Shares in CRH closed down 1.9pc in London at £13.42 (€15.84).