Shake-up at CRH as it plans major review of global operations
CRH is undertaking a major review of its global operations that will probably lead to quick sales of non-core businesses and result in its investment strategy being revamped.
Ireland's biggest company, with a €14bn market capitalisation, said the aim of the review was to "identify and focus on" the businesses that offer the most attractive future returns for its shareholders and to help prioritise capital allocation.
CRH, headed by chief executive Myles Lee, has been criticised in the past by some investors for failing to target sufficient growth in developing countries. It has countered that criticism by saying that many of its peers that acquired assets in such regions in recent years did so at over-inflated prices.
Announcing its review yesterday as it released an interim management statement, CRH pointed out that in the first nine months of this year it had incurred acquisition and investment expenditure of €660m, about 25pc of which was made in regions such as Ukraine, India and China. Since 2007, CRH has also disposed of €2bn worth of assets. Last month, CRH opened a regional headquarters in Singapore. In August, it said its 50-50 joint venture in India had agreed to buy a cement maker in the country for €175m.
Incoming CRH CEO Albert Manifold, who is chief operating officer at the group, told investors yesterday that while an update on the review would be given in February, it would be early summer next year before CRH could be definitive in terms of which businesses it would be exiting.
He said that CRH was looking at where there were opportunities to grow over the next decade. He said the review was wide and comprehensive and indicated that it would result in more than incremental change.
"With changing regional growth dynamics in the global economy, management is undertaking a detailed assessment of our portfolio to identify and focus on the businesses which offer the most attractive future returns for our shareholders," the company said.
In 2010, CRH sold its European insulation business to Cavan-based Kingspan for €120m. The same year it sold virtually all its interest in a US wire products firm for about €37m.
CRH added that the review was likely to result in further disposals of non-core businesses which, together with the impact of the continuing difficult environment across Europe, could give rise to a non-cash impairment charge in its accounts this year.
The company provided a positive review of its third-quarter performance yesterday. It said sales in the period rose 2pc to €5.4bn, while third-quarter earnings before interest, tax, depreciation and amortisation were 3pc higher at €660m.
Shares in the company were up over 3.5pc in Dublin at one stage yesterday.