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CRH resumes growth as Brexit anxiety wanes

Management expects the difficult UK market to stabilise post-election
CRH resumes growth as Brexit anxiety wanes

CRH (CRH) saw like-for-like sales and cash profits improving across its European and American materials businesses, as well as in the building products division through 2019. Management attributed this to a “positive demand backdrop” in America and certain European regions. The UK remained a black spot in the period, with Brexit uncertainty leading to reduced construction activity. However, with decreased uncertainty following the general election, the building materials group is expecting the market to stabilise in the coming year.

IC TIP: Buy at 2,617p

Its other markets are expected to continue to do well and, as state and federal funding in the US underpins further growth, management is planning to change its reporting currency to the dollar to match what is now its largest market, thus reducing the potential for foreign-exchange volatility.

The group made 11 divestments and disposals in the period, ultimately making an aggregate loss of €1m (£840,000) – compared with €27m last year – as the sale of the group’s half of the Indian cement joint venture, My Home Industries, offset its profit from the divestment of its European Shutters and Awnings business. 

Bloomberg consensus forecasts give adjusted EPS of 234¢ in 2020, up from 201¢ in 2019.

CRH (CRH)    
ORD PRICE:2,617pMARKET VALUE:£20.5bn
TOUCH:2,616-2,619p12-MONTH HIGH:3,116pLOW: 2,266p
DIVIDEND YIELD:2.8%PE RATIO:15
NET ASSET VALUE:2,158¢*NET DEBT**:39%
Year to 31 DecTurnover (€bn)Pre-tax profit (€bn)Earnings per share (¢)Dividend per share (¢)
201523.61.038962.5
201624.81.6215065.0
201725.21.8722768.0
2018 (restated)23.21.7416172.0
201925.12.1220283.0
% change+8+21+25+15
Ex-div:12 Mar   
Payment:28 Apr   
*Includes intangible assets of €8.4bn, or 1,075p a share, £1=€1.15 **Includes lease liabilities of €1.5bn