Monday 19 August 2019

CRH mulls new share buyback for investors

Cash plans: CRH chief executive Albert Manifold is eyeing a mix of dividends and buybacks
Cash plans: CRH chief executive Albert Manifold is eyeing a mix of dividends and buybacks
John Mulligan

John Mulligan

Building materials giant CRH is considering another buyback after announcing that it has just completed a previously announced scheme to buy back €1bn of shares.

The firm will announce details of further possible buybacks later this month.

The company said yesterday that it had completed the final phase of its latest buyback programme, with €1bn returned to shareholders over the past 12 months.

"Further share buybacks are under active consideration," it added, confirming it will unveil details when it issues a trading update at the end of the month.

The plans come as CRH has fallen under the scrutiny of Europe's biggest activist investor, Stockholm-based Cevian Capital.

It recently said that it had acquired a stake in CRH. The stake is currently less than 3pc but given Cevian's history it is likely it will look to increase this to at least 5pc.Cevian's managing partner, Christer Gardell, said that CRH has strong positions in attractive markets, and is convinced that the Irish group could become "significantly more valuable".

Highly acquisitive, CRH has expanded its footprint with a strategy of continuous bolt-on buys, as well as occasional big deals. CEO Albert Manifold says the company is ruthless in divesting of subsidiaries that don't meet the group's returns criteria, recycling capital into other purchases.

But some analysts have questioned its core, arguing that CRH's organic growth has ground to a halt.

It's an allegation that CRH has defended, pointing to modest organic revenue growth last year, and in preceding years.

CRH spent €3.6bn on acquisitions in 2018 and completed €3bn of disposals.

Mr Manifold said last month that CRH is highly cash-generative and will use free cash flow for a mix of dividends and share buybacks, bolt-on acquisitions and to invest in organic growth this year.

He said 2019 would be a "year when we consolidate and deliver" rather than target a major acquisition.

Irish Independent

Also in Business