Wednesday 26 October 2016

Index inclusion to spark €1bn hunt for CRH stock

Published 26/08/2016 | 02:30

Albert Manifold, CRH
Albert Manifold, CRH

Funds that track stock indicies will be forced to buy €1bn of CRH shares if the Irish stock re-enters the EuroStoxx 50 of the Eurozone's leading shares next week as is now widely expected, according to analysts at Cantor Fitzgerald.

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With a market capitalisation of more than €24bn CRH is now comfortably Ireland's biggest stock market-listed company - having been briefly overtaken by Ryanair when both companies were valued at around €17bn in February.

CRH's recent share rise, including a 2.275pc increase to €29.711 a share yesterday, means it is likely to be added to the EuroStoxx 50 index of the biggest Euro-area listed companies, when the index is updated on August 31.

Yesterday, CRH reported earnings before interest, tax, depreciation and amortization (EBITDA) of €1.120bn for the first six months of the year - beating forecasts. Sales soared by 35pc to €12.7bn in the first six months of the year - reflecting the impact of acquisitions and organic growth, in particular at its American units.

Profit before tax increased by €344m to €407m and the company upped its dividend to 18.8c.

CRH chief executive Albert Manifold said the firm had a "very satisfactory" start to 2016, and indicated a return to deal-making next year, saying the business could spend €1.5bn to €2bn on takeovers and stay within budget plans.

Full-year EBITDA is now forecast by the company to top €3bn.

Analysts said the results were positive. Albert Manifold said the group will push out into developing markets, including India, China and the Philippines where it already operates in "a measured way".

CRH is on "the right side of history", he said, including having 90pc of its business being in the US and Europe when those growing markets are under supplied with housing and infrastructure

Cantor Fitzgerald's analyst Colin Farley tipped CRH as a new additions to the EuroStoxx50 Index.

If confirmed, index trackers would need to buy €1bn of CRH stock in order to balance their portfolios in line with the index, he said.

Irish Independent

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