Building materials group CRH grew revenues by 13 per cent in the first six months of its financial year, buoyed by strong growth in the Americas, but against a challenging background in Europe. The group is forecasting “good progress” for its full-year earnings as it said it will acquire a US glazing manufacturer for $1.3bn.
Revenues rose by 13 per cent to € 9.4 bn in the six months to end June 2015, down 1 per cent in Europe and up 26 per cent in the Americas. Earnings (EBITDA) from continuing operations advanced by 10 per cent to €555m, buoyed by strong growth in the Americas. Profit before tax rose by €2m to €63m.
CRH chief executive Albert Manifold said: “We have made good progress towards achieving our goal of restoring margins and returns to peak over the cycle, with further margin improvement in each operating division. We have also recycled capital from non-core divestments into value creating acquisitions, while maintaining a disciplined, efficient balance sheet. We are now applying CRH rigour to these new businesses to integrate them efficiently and to drive performance.”
CRH said that in Ireland, construction activity continues to “gather momentum”. With the benefit of cost reduction initiatives and the resizing of its businesses over the past number of years, CRH said that operating profit and margin improved in Ireland and it is in a strong position “to benefit from the continued growth”.
CRH will maintain its interim dividend at 18.5 cent a share.
Looking to the second half of the year, CRH said that the outlook in Europe is for a mixed macro-economic backdrop, with earnings forecast to be “broadly in line” with 2014.
In the Americas, CRH expects the “positive momentum” seen in construction markets during the first half of the year to continue into the second half.
“While the strong finish for our Americas business in 2014 means that the second half comparatives for this year are expected to be somewhat tougher, EBITDA from continuing operations is expected to be ahead of the corresponding period 2014 on a constant currency basis (H2 2014: €0.7 billion),” CRH said.
Overall, it expects group earnings to show "good progress" on second half 2014.
Deals
CRH also said on Thursday that it is to acquire US C.R. Laurence Co. (CRL), from the Friese family, for a total consideration of $1.3 billion, including deferred consideration at a net present cost of US$86 million (payable over five years). CRL is one of North America’s leading manufacturers and distributors of custom hardware and installation products for the professional glazing industry. The business will be acquired debt free and completion of the purchase is anticipated for early September 2015. CRH will finance the transaction using existing financial resources.
CRL has forecast sales for 2015 of $570m, on which earnings of $115m are expected.
Mr Manifold said that CRL is an “ excellent operational fit with our building envelope business in the United States and represents an exciting opportunity for CRH”.
Of its overall transactions in the first half of the year, CRH said that it had divestment/disposal proceeds of € 670 m, while it spent €113m on acquisitions and investments.
CRH also said that its acquisition of European and American assets from Lafarge and Holcim is now complete and integration is underway.
