CRH (CRH) investors had already benefitted from news that management had upgraded the synergies expected from its acquisition of Ash Grove Cement by a fifth. Now, the building materials group has raised its financial targets again, this time targeting a 300 basis point improvement in its adjusted cash profit margin by 2021. That would be up on the 12 per cent recorded in 2017.
Management is reorganising its businesses into three segments, combining its Europe lightside and distribution businesses with the Americas products business to form one building products division. That will sit alongside its Europe and Americas divisions. It expects the business to account for around a third of adjusted cash profits in 2019. A review of the Europe distribution business – where performance has been patchy – is also under way, aimed at improving margins.
Management is confident on cash generation, targeting €7bn (£6.1bn) of financial capacity over the next four years, after capital expenditure and dividends. That’s before taking into account capital from a further €1.5bn/€2bn in planned divestments over the medium term.
