Tuesday 18 December 2018

CRH shares rise as market laps up plan

CRH CEO Albert Manifold
CRH CEO Albert Manifold
Donal O'Donovan

Donal O'Donovan

Shares in CRH were up more than 4pc yesterday after the country's biggest company indicated it could sell its European construction supplies retail arm, as it looks to boost margins and squeeze more cash out of operations.

Shares were up more than 5pc at one stage yesterday - the biggest one day rise in a year, before giving up some of those gains.

CRH has initiated a strategic review of the distribution business, which sells everything from roof tiles to flooring and plumbing supplies, the company announced to the market yesterday.

Such reviews often precede a sale. At the same time, the company will unite the operation with two other divisions - one in Europe that makes shutters and awnings and another in the US that produces architectural glass, walls, precast concrete and patio slabs.

The new building products operation will be run by Keith Haas, president of the Americas products division.

It will become one of three main units of CRH, alongside separate European and US heavy construction materials arms - producing aggregates, cement, lime and asphalt.

The company had seven businesses at the start of the year, including a distribution operation in the Americas that it sold in January for $2.6bn (€2.2bn).

The company aims to unlock €7bn of financial capacity over the next four years, and to improve its profit margins by 300 basis points, chief executive officer Albert Manifold told investors at a conference in New York yesterday.

The moves could create at least €12 a share in incremental value, analysts at Davy Research said. "This is unparalleled in the sector and provides the company with significant value-creation potential," Davy's Robert Gardiner and Barry Dixon said in a research note.

CRH jumped 4.8pc to €31.95 a share mid-morning in Dublin after rising as much as 5.5pc for the biggest intraday gain since March 2017.

The advance lifted CRH's market value to €26.9bn.

Sales at the European distribution business totalled €4.1bn in 2017, or 16pc of the group's total, according to its annual report. CRH's review aims to improve the business's margin and returns and also will explore "other strategic options". (Additional reporting Bloomberg)

Irish Independent

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