CRH preparing to spend €1.5bn on acquisitions following sell-off

CRH is preparing to spend up to €1.5 billion on acquisitions, as it forges ahead with a sell-off of underperforming units bought during the last boom in favour of fresh investment in growth markets in the US and eastern Europe.

The company told shareholders at its annual general meeting in Dublin yesterday that the €750 million it expects to yield from the first tranche of sell- offs will be reinvested in acquisitions. CRH chief executive Albert Manifold said afterwards the full war chest would become available "over the next 18 months".

Portfolio review
Mr Manifold, who replaced Myles Lee at the helm in January, said "various sales processes are under way" with regard to the first 45 business units, equivalent to 10 per cent of its assets, that it has identified for sale as part of a portfolio review started last year.

He told yesterday’s meeting that of the further 20 per cent of its worst-performing assets it had placed under review, CRH has already decided to retain half. About 10 per cent of its assets are still being assessed for potential sale. Mr Manifold said the portfolio review process would be completed “in the third quarter” of the year.

He said CRH would "look at" acquiring any assets that came on to the market as a result of the merger of rival cement companies Lafarge and Holcim, but that the deal would otherwise have little impact on CRH.

“We will always look at assets that come to the market. Cement is a profitable part of our business,” said Mr Manifold.

CRH said its like-for-like sales in Europe were up 10 per cent to the end of April, but that its US operations were ahead by only 2 per cent because of difficult winter weather conditions across the Atlantic.

The company expects its earnings for the first half of the year to total about €500 million, and that its earnings for the second half would be “somewhat ahead” of the €1 billion it recorded for July to December 2013.

'No issues' in Ukraine
Despite the upheaval in Ukraine, where CRH has assets of €450 million and 1,500 staff, its cement sales there were up 30 per cent. Mr Manifold, who was once based in Ukraine for CRH, said the political situation has caused "no issues whatsoever" for the business.

“Most of our assets are in the [quieter] west of the country. We review security on an ongoing basis, so if the situation changes we will be prepared. We don’t know yet what the medium term impact will be for investment,” he said.

The company also said it is “well on track” to deliver cost savings of €100 million this year, to bring cumulative savings since 2007 to a total of €2.5 billion.

CRH's chairman Nicky Hartery rejected criticism from Palestinian activists at the meeting about CRH's involvement with the Israeli cement company, Nesher, in whose parent company it holds a 25 per cent stake.

Mr Hartery refused to say whether the company was considering selling the stake as part of its portfolio review.

“We have 45 units that are impaired and we are not announcing anything in relation to any of them today,” he said.