Tuesday 19 November 2019

CRH on track for golden era after being 'to hell and back'

CRH chief executive Albert Manifold
CRH chief executive Albert Manifold
John Mulligan

John Mulligan

CRH - Ireland's biggest company - is on the cusp of a "very significant growth period" and will benefit from an upswing in US construction activity that could last a decade, according to chief executive Albert Manifold.

Shares in the Irish building materials giant jumped yesterday after it revealed a strong first-half performance, driven by growth in the United States.

CRH has also agreed to pay $1.3bn (€1.1bn) for a US-based glazing supplies firm, CR Laurence.

The acquisition comes less than four weeks after CRH completed the €6.5bn acquisition of assets from rivals Holcim and Lafarge following their merger. It has also just gained a foothold in Australia, buying a small business there.

CRH's revenue in the first half of 2015 rose 13pc to €9.4bn, with a 26pc rise in the Americas. Sales from continuing operations were 17pc higher, rising 3pc in Europe and 32pc in the Americas.

Earnings before interest, tax, depreciation and amortisation rose 10pc to €555m, helped by beneficial currency exchange rates.

While activity in the US was robust, Europe largely remains a mixed bag. Mr Manifold said CRH has "been to hell and back" in Europe over the past few years of the downturn.

He also told investors that CR Laurence (CRL) has the potential to be the first truly global business owned by CRH.

CRL's owners already had plans in place to further expand its presence in Europe and further afield.

CRL has about 60,000 customers throughout North America, and processes 7,000 orders a day there, worth an average of $350 each.

Of its orders, 65pc are made over the internet.

The chief executive said that "at least" $40m of synergies could be extracted from the acquisition. CRH already makes extruded aluminium that holds large glass panels used in offices and shops.

Mr Manifold said CRL currently buys about 10m kilos of extruded aluminium a year - almost none of it from CRH.

Mr Manifold said CRH will be "very selective" regarding bolt-on deals in the next couple of years but will begin targeting larger deals again by 2017 or 2018.

CRH opened an office in Sydney last year. Mr Manifold said the acquisition of a manufacturer of plastic and concrete products there will accelerate CRH's entry to the market.

He said Australia and New Zealand are an "area of interest" for CRH and it will be further developing its presence there.

He also pointed out that the acquisitions from Holcim and Lafarge are performing as expected, and the company will spend the next year integrating those new units, which have expanded CRH's reach into new geographies.

CRH has owned the acquired assets for just over three weeks. It has yet to complete the purchase of a business in the Philippines that's part of the deal.

Some analysts have questioned whether those Lafarge Holcim assets will perform as CRH expects them to. But Mr Manifold said the assets have been performing as expected.

CRH has completed €1bn of divestments under a portfolio review, and set aside €32m as a provision against a possible negative competition ruling in Switzerland due in October.

Infrastructure spending 'crucial' for Irish economy

Ireland needs to target more infrastructure investment as the economy picks up again, CRH boss Albert Manifold has warned.

Speaking as CRH released strong first-half results yesterday, he said the company's sales volumes have been picking up in Ireland. The country accounts for a very small proportion of the group's overall business.

"Off horrendous lows, we're seeing good growth in the Irish construction industry this year," said Mr Manifold.

But he said the recover is largely Dublin-centric. "You only have to go 20 miles down the road to get a real sense of how tough it is in the construction sector and how tough it is in the economy in Ireland."

He said that investment in infrastructure is crucial to continue attracting foreign direct investment.

"That's where infrastructure becomes crucial - infrastructure to get products and goods in and out of the country, and to get people in and out and around the country," he added.

Mr Manifold said a competitive environment is needed when vying for investment with other countries.

"We have a lot of advantages going for us. But what we have to do is provide the competitive infrastructure and resources to encourage people to come in and invest in our country," he said.

"What I'd like to see is more infrastructure spend to have a more even spread around the country."

Irish Independent

Also in Business