Acquisition spending at CRH nears €500m

CRH is heading for €500 million in the year to date, and the group said yesterday that it is targeting Russia and southeast Asia for further expansion.

In a statement published at its annual general meeting in Dublin yesterday, CRH said that it has spent approximately €385 million on 15 acquisitions and investments.

It recently announced that it has agreed to buy Mykolaiv Cement in Ukraine for €96 million, making it the biggest player in the industry in the eastern European country.

Speaking after the meeting, chief executive Myles Lee confirmed that the Mykolaiv deal would bring spending close to half a billion for the year so far, but acknowledged that the transaction may not be completed until the second half of the year.

The group also took over Cementos Lemona in Spain as part of a settlement of a dispute that saw it transfer its 26 per cent stake in Iberian cement producer Uniland to Cementos Portland Valderrivas. Including this swap, the group has gained €180 million on disposals so far this year.

Mr Lee said that CRH has opened an office in Singapore and is looking at southeast Asia, including countries such as Indonesia where there is strong growth, for possible acquisition targets. It already has stakes in businesses in China and India.

It has had an office in Moscow for the last 18 months, and the group’s chief executive said that it is looking specifically at the area of Russia west of the Urals for possible expansion opportunities.

Mr Lee said that CRH had been looking at Russia for about 10 years, but had never managed to do a deal there. “That was largely done from Dublin, so we decided about 18 months ago that we needed a dedicated resource in Moscow in order to penetrate what was going on in the industry generally,” he explained.

He stressed that the group researches any market carefully before it decides on investing there. Both offices have small staffs that are focused on carrying out this research.

Polish subsidiary
Responding to a number of speakers, who raised the fact that the Polish authorities fined CRH's local subsidiary Grupa Ozarów €25 million in 2009 for anti-competitive practices, chairman Nicky Hartery said that its appeal against this is due to be heard at the end of the year.

It is defending separate actions in the Irish courts from rivals Goode Concrete and Framus, both of whom allege that it was involved in various anti-competitive practices, including price-fixing, in the Republic. CRH has denied these claims. Mr Lee said that he could not comment on either case.

In an interim management statement published ahead of the meeting in Dún Laoghaire’s Royal Marine Hotel, CRH said that as a result of bad weather on either side of the Atlantic, which hit building activity in its main European and US markets, earnings for the first half of the year will be €400 million, 16 per cent less than the €480 million in reported for the first half of last year.

However, it added that assuming a return to more normal weather patterns, earnings in the second half are likely to be ahead of the €1.04 recorded during that period in 2012.