Sunday 26 January 2020

CRH may suspend scrip dividends during buybacks

Albert Manifold, Chief Executive, CRH
Albert Manifold, Chief Executive, CRH
John Mulligan

John Mulligan

Ireland's biggest company, CRH, may look at suspending scrip dividend payments in the future whenever it's undertaking a share buyback, according to chief executive Albert Manifold.

The review comes just a day after the building materials group announced plans for a €1bn share buyback to be executed over the next 12 months.

But the scrip dividend payments in respect of this year won't be impacted. A scrip dividend is where shareholders opt to receive their dividend in the form of shares in a company, rather than in cash.

Mr Manifold and chief financial officer Senan Murphy confirmed that the topic has been, and is, under discussion at board level.

Mr Manifold said the amount of shares issued under scrip dividend payments typically varied due to the influence of arbitrage.

Shareholders receive a dividend entitlement on a particular date, but the date on which that dividend is used to issue the scrip shares may be a later date.

That means the number of shares issued under a dividend can shift depending on the share price movement in the intervening period. CRH paid €77m in scrip dividends in respect of 2017, from a total of €546m in dividends allocated to shareholders. A special resolution passed at the group's annual general meeting in Dublin yesterday gives the CRH board flexibility regarding the mechanism for setting the price for scrip dividend offers.

"There are some small shareholders who like the scrip dividend," said Mr Manifold, adding that this year would give a clearer picture of how receptive they are to it. And Senan Murphy told shareholders: "Having a scrip dividend in place at the same time as a buy back going on does seem counter-intuitive."

Mr Manifold said CRH had made major advances in its business in the past six years.

He pointed out that cement demand in both the United States and Europe slumped during the recession and has still not recovered, implying significant headroom for growth in both geographies.

He also acknowledged that CRH had made poor investment decisions in the past.

"Over decades CRH has made so many mistakes, it's embarrassing," Mr Manifold told shareholders. "We're not the smartest guys in the room. We're not too stupid either.

"The truest sense of a business is the returns in cash it generates," he added.

Irish Independent

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