CRH hikes dividend by 15% amid earnings surge

CRH proposed a 15 per cent step-up in its annual dividend on Friday as the building materials group reported a surge in earnings and retrenched from emerging markets with the sale of its interest in an Indian cement business.

The company also announced that it would change its reporting currency from euro to dollar this year to reduce the potential for foreign exchange volatility on future results. Almost two-thirds of its earnings are now generated in the US currency.

Earnings before interest, tax, depreciation and amortisation (Ebitda) jumped 25 per cent to a record €4.2 billion in 2019, driven by acquisitions and a widening of its margins, while “a positive demand backdrop” in the Americas and key regions in Europe also delivered like-for-like earnings expansion of 7 per cent, it said.

Although company executives told analysts on a call that the UK business has been “challenging” amid concerns over Brexit, they said they “expect some stabilisation in the market” as the country’s prime minister, Boris Johnson, has committed to spending on infrastructure.

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The move by CRH – which continued to pay a dividend following the financial crash – to increase its dividend by 15 per cent to 83 cent a share “demonstrates management’s confidence in the sustainability of the current levels of profits and cash”, Davy analyst Robert Gardiner said.

The company said it had sold its 50 per cent interest in its Indian joint venture, My Home Industries, for a deferred consideration of €300 million, bringing total proceeds from asset sales, including the previously announced sale of its European distribution business, to €2.1 billion for the year. CRH had acquired its Indian holding in 2008.

Philippines business

CRH was also reported in November to have hired JP Morgan to find a buyer for a Philippines cement business it inherited in 2015 through its €6.5 billion acquisition of assets from European peers Lafarge and Holcim as part their own merger.

The unit has been loss-making for much of its time under CRH, dogged by weak infrastructure spending, rising local competition and a flood of cheap imports. However, CRH executives signalled on Friday that it had turned a corner.

Overall, group sales rose 6 per cent last year to €28.3 billion, while its earnings margin widened by 2.3 percentage points to 14.8 per cent.

"CRH delivered good profit growth in 2019, supported by positive momentum in our heritage businesses and strong contribution from recent acquisitions," chief executive Albert Manifold said in a statement.

“With a continued focus on margin expansion, cash generation and enhanced returns for shareholders, we believe that 2020 will be a year of further progress for the group.”

CRH also set new carbon emission reduction targets, which it characterised as “industry leading. Cement producers count among sectors in focus as institutional investors become more conscious of the environmental impact of where they put their money.

The company aims to cut its CO2 emissions per tonne of cement produced by 2030 to a third of the level they stood at in 1990. “In addition the group has an ambition to achieve carbon neutrality along the cement and concrete value chain by 2050,” it said.