Building materials giant CRH (CRH) has had an unusually busy half-year, with acquisitions of around €7.5bn (£5.5bn) and disposals of nearly €700m. The biggest asset it acquired was the suite of cement, aggregates and ready-mixed concrete plants that came up for disposal on competition grounds as a result of the Lafarge/Holcim merger. This is now complete and integration is under way.
These half-year results were also accompanied by news that CRH has acquired CR Laurence, a US manufacturer and distributor of custom hardware and installation products. Net debt at the end of June was €1.2bn - down from €3.7bn a year earlier, helped by the proceeds of a €1.6bn placing in February. But the latest acquisitions imply pro-forma net debt of €8.6bn. However, this is expected to fall as the ongoing disposal programme continues and cash generation accelerates. Cash outflow in the first half was €600m, but this is in line with the normal seasonal pattern in the company's trading working capital; a strong operating inflow is expected in the second half.
Despite all this activity, operating profits rose from €171m to €189m. Much of this was due to an improved performance from the US operation, where sales increased by a third. In part, this improvement reflected some soft comparatives and increased activity as the weather remained favourable. Within the three trading arms, the products division increased operating profits by 40 per cent to €112m, while distribution delivered a similar rise to €24m. Trading in the materials division was tougher, but operating losses nearly halved to €34m. The performance in Europe was mixed, with reported sales down 1 per cent.
CRH continued to crack down on its cost base, delivering €28m of savings in the first half at a cost of €14m. Management remains on track to achieve savings of €75m for the full year.
Analysts at broker Davy are reviewing their forecasts for the full year, but have indicated that a 4-5 per cent upgrade is likely.
| CRH (CRH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,872p | MARKET VALUE: | £15.4bn | |
| TOUCH: | 1,871-1,874p | 12-MONTH HIGH: | 1,983p | LOW: 1,220p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 31 | |
| NET ASSET VALUE: | 1,523¢* | NET DEBT: | 10% | |
| Half-year to 30 Jun | Turnover (€bn) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2014 | 8.3 | 61.0 | 6.1 | 18.5 |
| 2015 | 9.4 | 63.0 | 5.7 | 18.5 |
| % change | +13 | +3 | -7 | - |
Ex-div: 10 Sep Payment: 6 Nov £1=€1.362 *Includes intangible assets of €4.4bn, or 536¢ a share | ||||
