CRH shares soared to a record high on Thursday after the building materials giant accompanied a strong set of full-year results and outlook for this year by outlining plans to spend $35 billion (€32.3 billion) over the next five years on deals, investment and payments to investors.
The market value of the company rose as much as 6.1 per cent to $57.4 billion on Wall Street.
Adjusted earnings before interest, tax, depreciation and amortisation (ebitda) rose 15 per cent last year to $6.2 billion (€5.7 billion). CRH sees earnings rising between 5.6 per cent and 10.5 per cent this year to between $6.55 billion and $6.85 billion (€6.34 billion).
Davy analyst Ross Harvey said the earnings figure for 2023 was essentially 3 per cent above CRH’s guidance from last November, when taking into consideration the company’s transition to US GAAP accounting rules last year.
“The basis of the CRH investment case is not changing but it is accelerating,” said Mr Harvey. “CRH has both achieved a very strong 2023 performance and guided towards further impressive growth in 2024.”
Total revenues grew by 7 per cent to $34.9 billion, boosted by the impact of acquisitions.
CRH chief executive Albert Manifold said last year was “another record year of financial delivery for CRH, supported by good underlying demand across our key end-use markets, further pricing progress and the continued benefits of our differentiated, customer-focused strategy”.
“Over the last decade our business has evolved from being a supplier of base materials into a fully integrated provider of value-added solutions. Through our technical expertise and the advancements we have made in product innovation, we are solving complex problems for our customers while making the construction process simpler, safer and more sustainable.”
The company dropped its Dublin stock market listing last September as it took out a primary quotation on the New York Stock Exchange. The stock has surged by as much as 54 per cent since then, helped by increased optimism about infrastructure spend in the US and Europe, talk of central banks cutting interest rates this year, and as the company enjoyed more attention from US-based investors.
[ CRH’s move down under prompts some head-scratchingOpens in new window ]
Eventual inclusion on the key S&P 500 stock market index should further boost demand for the stock, according to market observers.
Broken down, the group’s largest division, Americas Materials Solutions, was the main earnings driver, with its ebitda rising 16 per cent to $3.06 billion as it increased prices across the board. It pushed through 14-15 per cent price increases for aggregates and cement and its road solutions business, the biggest roadbuilder in North America, was underpinned by US infrastructure spend.
Americas Building Solutions’ ebitda increased 18 per cent to $1.44 billion, boosted by the theme of corporates, such as drugmakers, computer chip groups and car battery suppliers, moving manufacturing back from low-cost Asian locations.
The European Materials Solutions unit saw price increases offset weaker activity levels. Aggregates volumes declined by 7 per cent while cement volumes were 10 per cent behind on an underlying basis, hit by lower new-build residential activity and unfavourable weather in several key markets. The division’s road solutions unit delivered 10 per cent asphalt pricing increases, even though volumes declined by 6 per cent.
Revenues and earnings declined by 2 per cent and 17 per cent, respectively, in the Europe Building Solutions unit amid slower homebuilding activity.
CRH managed to expand its group ebitda margin by 1.2 percentage points last year to 17.7 per cent.
The company bought back $3 billion of shares last year and purchased a further $300 million of stock so far this year. It said on Thursday that it plans to repurchase an additional $300 million of shares by May 9th and “will continue to assess our share buyback programme throughout 2024, with further updates on a quarterly basis”.
“The strength of our balance sheet together with our relentless focus on the efficient allocation of capital enables us to capitalise on the opportunities we see for further growth and value creation in 2024 and beyond,” Mr Manifold said.
A raft of acquisitions and non-core disposals since Mr Manifold took charge in 2014, including the sales of its US and European building products distribution units, have simplified the group to create a more digestible investment case for investors around roadbuilding, infrastructure and building solutions.
“Over the last decade our business has evolved from being a supplier of base materials into a fully integrated provider of value-added solutions,” said Mr Manifold. “Through our technical expertise and the advancements we have made in product innovation, we are solving complex problems for our customers while making the construction process simpler, safer and more sustainable.”
[ CRH completes $2.1bn acquisition of cement and concrete assets in TexasOpens in new window ]
Last year was a subdued one on the mergers and acquisitions (M&A) completions front by CRH standards, as it completed 22 bold-on deals for a total consideration of $700 million. Disposals raised $100 million.
While the group agreed in November to buy a cement and ready-mix concrete business in Texas for $2.1 billion, the transaction was only completed this month.
CRH also agreed to sell its lime operations in Europe last year for $1.1 billion. The first phase of this divestiture, comprising CRH’s lime operations in Germany, Czech Republic and Ireland, was completed in January 2024. The remaining phases, comprising operations in the UK and Poland, are expected to go through this year.
This week, the group agreed to buy a 53 per cent stake in Australian materials business Adbri for $700 million, increasing its total shareholding to 57 per cent. The deal marks the first big move by CRH outside its core European and North American markets since it acquired businesses in the Philippines and Brazil nine years ago under the €6.5 billion takeover of an international portfolio of assets from Lafarge and Holcim as the two European companies sought to win regulatory approval for their own merger.
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