Biden legislative push a key driver of CRH’s stateside bonanza

CRH may be Ireland’s biggest and most dominant stock market company but its eyes are very much on America.

The building materials giant is planning to move its primary stock market listing to the US – a blow to the Dublin and London stock exchanges.

But looking at the company’s bumper set of annual results – and listening to its CEO Albert Manifold – it is not hard to see why it sees such a bright future stateside.

Indeed, it can thank the ambitious legislative agenda of President Joe Biden for boosting US prospects and giving it good reason to shift its primary listing.

Ten years ago earnings were split 50:50 between North America and Europe, but not any more. Seventy five per cent of its core earnings of $5.6bn (€5.2bn) now come from the US.

“And given what we’re seeing ahead of us, that’s going to continue to grow. We believe it will be close to 90pc over the next decade or so,” said Manifold in an analyst briefing. “And the US is expected to be a key driver of growth for CRH as we go forward.”

CRH said its revenues for the year rose by 12pc to $32.7bn, while profit after tax was 10pc ahead of 2021 at $2.7bn.

Manifold highlighted Biden’s $430bn Inflation Reduction Act, and a rise in the on-shoring of manufacturing activity due to geopolitical changes, as key drivers.

“The US really is in good shape and we’re facing I suspect five to 10 years of really strong growth,” Manifold told Reuters.

“We are now at an historic step-off point in the US.

"We had the confluence of events coming together, three very, very significant federally funded programmes, the likes of which the United States has never seen before,” he said.

While Europe – including Ireland – is also performing well for CRH, and also benefiting from big government and EU funding programmes, it is clear the really big prospects for the firm are in the US.

The $1.2trn Infrastructure Investment and Jobs Act has provided for an about 50pc increase in federal highway funding alone over the next five years and the CHIPS and Science Act, is also providing a major federal boost to the semiconductor sector.

Even the slowing US house market is not a big concern: “We expect the slowdown in US residential demand to be relatively short and shallow.

"The long-term fundamentals of the market are very attractive, it’s supported by population growth, low inventory levels and a significant level of underbuild over the last decade,” Manifold said in the briefing.

Its booming US business has been a big part in delivering what Manifold described as CRH’s strongest balance sheet ever.

“Over the last five years we’ve allocated over $20bn of capital. We’ve invested significantly in our businesses over that time allocating over 60pc or just over $12bn to value accretive M&A and expansion CapEx projects.”

Last year alone the firm invested about $3.3bn in M&A across 29 transactions around the world, as well as a further $500m on development capital expenditure.

That, said Manifold, would mean CRH “will reap rewards for the decades to come”.

“CRH is a cash machine.

"We generated $4.4bn of cash in 2022. Again that gives tremendous optionality as we go forward in terms of how we deploy that capital,” he said.