Business

Activist shareholder wants more focused CRH, says stock could double

Cevian believes CRH has become too complex and needs further restructuring

CRH chief executive Albert Manifold has met representatives of Cevian in recent months

Fri Jun 28 2019 - 16:22

Irish cement maker CRH needs to press ahead with extensive structural improvements, activist shareholder Cevian said on Friday, adding that the company could double in value in the next three to five years if it does so.

CRH has been on a $10 billion acquisition spree over the past four years, accumulating a complicated structure, but has now begun shedding some assets and put its $2.3 billion European distribution arm up for strategic review.

Cevian, Europe’s biggest activist shareholder, disclosed its almost 3 per cent stake in CRH in February.

CRH has around 90,000 staff and strong market positions in Europe and North America, where it is the biggest producer of aggregates and asphalt for highway construction. Its businesses include heavy materials, building products and distribution.

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"This is an attractive industry and CRH has a strong position in its main markets, but the company has become too complex, both structurally and operationally, which hampers performance and traps value," Cevian's managing partner Christer Gardell said.

“The restructuring work that has been done so far is good, but continued far-reaching structural and operational improvements are needed for the Group’s assets to reach full potential,” he said in Cevian’s first detailed comments on CRH since disclosing the stake.

He said Cevian had met CRH's board and chief executive Albert Manifold several times in recent months and he was confident they would drive the measures still needed.

“They seem to be both pragmatic, shareholder-oriented and willing to ask fundamental questions around the businesses,” Mr Gardell said.

CRH has noted previously that it is focused on continuous business improvement, including returns for shareholders.

In has simplified its structure by organising it into three operating divisions with a view, it said at the time, to enhancing operational performance.

It has stated publicly that it plans to divest between €1.5 billion and €2 billion of assets in its current cycle as it manages its portfolio of businesses.

CRH is due to report first-half results on August 22nd.

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