Sunday 22 September 2019

CRH commits to UK market as earnings surge to new record high

CRH boss Albert Manifold
CRH boss Albert Manifold

Donal O'Donovan and  Ellie Donnelly

The UK's infrastructure spend has had the brakes on since 2016, as the exchequer there put major projects on a go-slow ahead of October's Brexit deadline, CRH CEO Albert Manifold says.

Supplying major infrastructure schemes is a big part of CRH's UK business. However, the head of the Irish construction supplies giant says its management will not make any snap decisions to sell UK assets or withdraw from the market there.

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"We make our decisions based on a 20-year or 25-year horizon," Mr Manifold told reporters yesterday.

"It is highly unlikely we'll be looking to divest (in the immediate wake of Brexit)."

CRH, Ireland's biggest company, yesterday reported record earnings before interest, taxation, depreciation and amortisation of €1.54bn in the six months to June 30.

Sales of €13.2bn were 11pc higher than the corresponding period of last year, according to the interim results.

CRH has generated almost €11bn of free cashflow over the past five years and will have record cash generation in the current year, Mr Manifold said.

That has boosted the flow of cash to shareholders, including a 2pc increase in its interim dividend and a further €350m round of share buybacks, both announced yesterday.

CRH had already completed the repurchase of €1.35bn of shares.

Cash generation means the business is well-placed to reinvest in its existing operations, including potential bolt-on deals, repay shareholders through dividends and share buy-backs, and maintain its own balance sheet in good health - including to be able to capitalise on large opportunistic acquisitions.

The performance was driven by both organic growth and acquisitions, and rooted in its two main markets in North America, and central and eastern Europe. The UK market makes up 7pc of CRH's earnings.

With Brexit looming, Mr Manifold said CRH's business there was insulated from potential supply chain issues because it manufactures and sells locally within markets, including the UK.

He said the business will deal with possible post-Brexit scenarios as they arise, cutting costs if the UK economy stalls, but boosting investment if the government there uses investment spending as a means to stimulate growth.

"I personally think we are at a level now that is just waiting to see what happens post-October," he said.

"You can take a bull view of it and say that, post-Brexit, there will be a significant investment programme across the UK for infrastructure - it certainly has those needs.

"You can take a bear view that it is going to lead to the collapse of the UK economy.

"I think it is going to be somewhere between the two."

In the US, Mr Manifold said he did not see a slowdown coming any time soon.

In its Americas materials arm, on the back of a "healthy" economic environment, like-for-like sales were 2pc ahead of the first six months of 2018. However, adverse weather conditions in certain regions hampered activity, CRH said.

Meanwhile, in its European materials division, the company said good underlying activity prevailed in key markets in western and eastern Europe.

Like-for-like sales growth of 6pc reflected a more normalised weather pattern, compared with the first half of 2018, along with price progress across all product lines.

However, in the UK, construction activity continued to decline.

Irish Independent

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