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CRH on the acquisition trail

Acquisitions, nice weather and a strong US market are all winners for CRH
March 2, 2017

Global materials group CRH (CRH) reported a strong 2016 performance, thanks to a number of acquisitions and a generally firmer footing in its key US markets. Sales were ahead by 15 per cent, but even without acquisitions grew by 4 per cent.

IC TIP: Buy at 2824p

CRH has a history of making acquisitions, spending €213m (£181m) on 21 bolt-on purchases in 2016, although this is small change compared with the nearly €8bn spent in 2015, including LH Assets and CRL. With its vast experience in integrating acquisitions, total synergies last year came to €89m. Operational gearing and strict cash management saw net cash flow rise nearly 5 per cent to €2.3bn, which helped to trim net debt by €1.3bn to €5.3bn.

The US accounts for around half of group sales, and an increase in residential and non-residential activity, together with favourable weather and acquisitions, helped to push ready-mixed concrete volumes up by a fifth, while prices were increased by 4 per cent. With the acquisition of LH Assets, CRH's Asian presence grew significantly, and with sales last year more than doubling, cash profit jumped from just €2m to €109m.

Analysts at broker Davy are forecasting pre-tax profit of €1.89bn and EPS of 163.8¢ in 2017, rising to €2.14bn and 185.3¢ in FY2018.

CRH (CRH)
ORD PRICE:2,824pMARKET VALUE:£23.5bn
TOUCH:2,823-2,824p12-MONTH HIGH:3,029pLOW: 1,700p
DIVIDEND YIELD:2%PE RATIO:22
NET ASSET VALUE:1,667¢*NET DEBT:37%

Year to 31 DecTurnover (€bn)Pre-tax profit (€bn)Earnings per share (¢)Dividend per share (¢)
201218.10.657562.5
201318.0-0.22-4162.5
201418.90.767962.5
201523.61.038962.5
201627.11.7415065
% change+15+69+69+4

Ex-div: 9 Mar

Payment: 5 May

*Includes intangible assets of €7.8bn, or 932¢ a share £1=€1.174