Irish building materials giant CRH believes that revived industrial construction in the US will aid profit growth this year.
The Dublin-headquartered company reported that profits rose 2 per cent to $1.3 billion (€1.12 billion) in the three months to the end of June.
Jim Mintern, its chief executive, told analysts on Thursday that “on-shoring and re-shoring” of big industrial projects and data centres in the US was driving demand for its products.
He said the New York-listed company expected this to continue, particularly with less than 40 per cent of the $1.2 trillion earmarked for roads and other publicly-funded building under the Infrastructure Investment and Jobs Act 2021 spent to date.
“We are the largest road paver in the US,” Mr Mintern remarked, adding that this made it a key supplier to up to 4,000 taxpayer-funded projects every year.
Randy Lake, CRH’s chief operations officer, noted that key parts of its US materials division were benefiting from re-industrialisation. The Irish company makes about 75 per cent of its profits in the US.
CRH spent $700 million buying businesses in the six months to the end of June.
Mr Mintern predicted that it would complete the $2.1 billion takeover of Eco Materials Technologies, which makes a low-carbon alternative to cement, by the end of the year.
CRH expects the market for Eco Materials’ products, known as “supplementary cementitious materials” (SCM), to double in the US by 2050, according to its CEO.
Mr Mintern made the comments on Wednesday night, as the group reported a better than expected 9 per cent rise in second quarter core profit and forecast full-year earnings of $7.5 billion to $7.7 billion (€6.4 billion-€6.6 billion), versus a prior range of $7.3 billion to $7.7 billion.
The Irish company agreed to acquire Eco Material Technologies for $2.1 billion last month to meet growing demand for its alternative products.
“In particular, what attracted us [to the deal] is that when you look out in the US, we estimate that the SCM market is going to double between now and 2050,” Mr Mintern said.
“This deal puts us right up there in terms of size and leadership levels in the US [and] gives us a very good growth platform.”
He noted that CRH was already familiar with the company and its management from doing business with it.
The acquisition will boost CRH’s capacity in the 135 million metric ton US SCM market to about 25 million tons, he added. CRH is the third largest cement manufacturer in both North America and Europe.
Mr Mintern said that subject to regulatory and other approvals, CRH should complete the deal in 2025.
CRH’s second quarter adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) of $2.5 billion was ahead of the $2.4 billion expected by an average of seven analysts polled by LSEG SmartEstimate.
Mr Mintern said the increase in the lower end of its full year guidance range was based on trading in the seasonally important month of July and a year-on-year increase in the volume and margins of contracted work across all major US product lines.
Poor weather hindered construction in the US earlier this year but an improvement in recent months sparked a surge in demand, Mr Mintern noted.
“Once the weather co-operates the work is there,” he added. – Additional reporting: Reuters
