Friday 30 September 2016

CRH focused on lowering debt but will size up deals

Published 04/03/2016 | 02:30

Albert Manifold, the CRH chief executive
Albert Manifold, the CRH chief executive

CRH will size up any "unique" acquisition opportunity that might arise this year even as it focuses on deleveraging its balance sheet following last year's landmark €6.5bn purchase of assets from rivals Lafarge and Holcim, according to chief executive Albert Manifold.

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Shares in CRH jumped yesterday after the company reported a surge in revenue and profits on foot of the acquisition last year. Excluding that impact, the results for 2015 were still strong, as the company benefited particularly from an improved environment in the United States.

Revenue last year rose 25pc to €23.6bn, while earnings before interest, tax, depreciation and amortisation (EBITDA) was 35pc higher at €2.2bn. That was better than analysts had expected.

Excluding disposals, currency benefits and the acquisition of the Lafarge Holcim assets, which CRH finalised the purchase of in August, revenue was still almost 17pc higher.

Currency tailwinds added about €218m to EBITDA, accoding to transformation director Maeve Carton.

CRH also paid $1.3bn in August to buy US glazing supplies firm CR Laurence. CRH's net debt at the end of 2015 was €6.6bn.

"There will be [acquisition] opportunities again," said Mr Manifold. "There is still a lot of distress out there and there's going to be a continuing shake-down in the industry and further consolidation. Provided we see value in there, we will be participating, but only when we have the financial capacity to do so.

"That's not to say, that if we saw a big opportunity to create value for our shareholders, for a deal that was out there that we wouldn't do it," said Mr Manifold. "I have to say that the chances of that happening - to be so enticing as to move away from our stated objective of getting back to normalised debt metrics, I just don't think it's there. But you never know."

Mr Manifold said that during the depths of the downturn, banks were willing to allow more forbearance to companies that were in challenging positions, but that now they are probably "less forgiving".

A lot of people got "badly mauled" during the recession, he added, and had perhaps loaded their balance sheets at the wrong time.

"You're seeing more and more businesses on the block… and businesses that people don't normally sell out of choice," he said. "In any one year we're literally looking at hundreds of deals."

Irish Independent

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