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Friday 22 August 2014

Lee to retire from CRH at end of year as Manifold eyes top job

Revenue 3pc higher at €18.7bn

John Mulligan

Published 27/02/2013 | 04:00

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CRH chief executive Myles Lee will retire as chief executive of Ireland's biggest company at the end of the year. He's been CEO since 2009.

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Mr Lee's retirement was announced as CRH – the world's second biggest building materials firm – said that its results were better than expected during 2012 despite recessions and sluggish growth in Europe. Chief operating officer Albert Manifold has been tipped to succeed him.

Revenue at CRH was 3pc higher at €18.7bn last year, but was 2pc lower on a like-for-like basis. Sales in the Americas were 2pc higher, but in Europe fell 6pc.

Earnings before interest, tax, depreciation and amortisation (EBITDA) slipped 1pc to €1.64bn. That was better than CRH had guided back in November. It was also ahead of analyst estimates.

Davy Stockbrokers had been expecting EBITDA of a little more than €1.6bn, placing the result 2pc ahead of its forecasts. The end result was 3pc ahead of the €1.59bn expected by Goodbody Stockbrokers.

Shares in the company traded higher in London and Dublin yesterday, valuing the firm at a little more than €12bn.

But the results brought into sharp relief divergent economic patterns in the US and Europe.

CRH's European divisions were hammered during 2012 as the business climate remained subdued and the debt crisis remained top of the agenda. Revenues at CRH's distribution unit fell 5pc to €4.1bn, by 10pc at its materials division to €2.68bn, and by 6pc to €2.48bn at its products unit.

Total revenue at its European units was 6.7pc lower at a little more than €9.3bn last year. In the Americas – almost all of which is accounted for by the United States – total revenues were 15.3pc higher in 2012 at €9.35bn.

Speaking to the Irish Independent, Mr Lee said that CRH has been "encouraged" by signs of economic recovery in the United States.

He said that while the residential side of construction is showing improvement, so too is non-residential construction activity.

US highway and road construction is an important part of CRH's business. Funding of the network is a political football in the United States, but Mr Lee said that volumes in the highway construction business look to be holding steady.

But in Europe, Mr Lee said events following elections in Italy have created new anxiety levels: "We need a period of stability in Europe," he said.

Divergence

He also denied that the divergence of the group's performance in Europe and the US underlined what some analysts say is a lack of diversification by the company into developing markets. CRH has small presences in countries such as India and China.

"Our moves (into developing markets) are lagging somewhat because of our history," he said, pointing out that CRH had really only started large-scale foreign expansion in the nineties.

He said CRH "can't be the same" as other firms. "We've our way of doing things," he said, adding that CRH will continue to examine potential takeover targets in developing jurisdictions. "You've got to do it at a pace that's consistent with returns," he said.

CRH has also agreed an asset swap in Spain, ending legal disputes with the country's largest cement producer, CPV.

Irish Independent

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