Monday 19 March 2018

CRH silences critics as pre-tax profits increase 280pc to €95m


Emmet Oliver, Deputy Business Editor

CRH, Ireland's most valuable company, appeared to have answered its critics yesterday by outlining plans to expand further into emerging markets, while maintaining its dividend for thousands of investors at current levels.

Shares in the building materials group rose as much as 3.6pc after it announced results for the first six months of the year.

Analysts have questioned the company's acquisition strategy and reliance on the US market, which gives it almost 50pc of sales. However, the company attempted to fight back yesterday by unveiling plans to buy assets in Russia and expand its presence in China, the world's fastest growing economy.

Meanwhile, it was able to report pre-tax profits rising to €95m, an increase of 280pc.

The company said yesterday it could spend up to €1.5bn on fresh acquisitions without putting its balance sheet or credit rating under threat. Most of the spending was likely to go on emerging markets, chief executive Myles Lee hinted, although no specific targets were mentioned.

Sales rose from €7.6bn to €8.1bn, despite softness in some of its US businesses. The outlook provided by the company was also not specific on earnings, although it hopes to fill in the gaps in November when its next trading statement is due.

The dividend, so precious to pension funds in Ireland in particular, has been maintained at 18.5 cent a share. The company has already spent €380m on acquisitions up to August. But worries over federal spending levels in the US continue to weigh on the stock, some analysts claim.

On that subject, Mr Lee was upbeat, saying that despite considerable political turmoil over the US debt ceiling, there was still no sign of sharp reductions in federal support for infrastructure.

He said he accepted that the Republican Party was less in favour of, historically, federal spending on infrastructure -- but as the presidential election drew nearer the job implications of swingeing cuts would come "more into the debate".

Mr Lee also said he didn't see the world slipping back into recession, although he admitted forecasts for growth were being trimmed back everywhere. The eurozone debt crisis was also not helping, he said, although he declined to comment on what might be the best solution to the problem.

The outlook produced by the company simply said there were great "market risks and uncertainties", which made it difficult to be precise about earnings. Most analysts remain on a buy recommendation for the company.

The company remains confident that its balance sheet is among the strongest in its sector and investors will realise this in time. For example, debt is 2.4 times earnings, whereas large peers like Lafarge are at 4.4 times, with Cemex at seven times earnings.

CRH chief executive Myles Lee (right) with chief operation officer Albert Manifold and finance director Maeve Carton at the global building material group's announcement of its interim results for 2011 at the Shelbourne Hotel yesterday.

Frank McGrath

Irish Independent

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