CRH expected to scale back investor returns from record €3.3bn this year

CRH will likely scale back cash distributions to investors over the next three years, following an expected record $3.5 billion (€3.27 billion) spend this year on share buy-backs and dividends, according to one of the world’s leading credit ratings agencies.

Fitch sees the building materials giant, which is on track to ditch its Irish stock market listing later this year as it moves its main quotation to New York, reducing its total shareholder remuneration to $2.5 billion next year and an average of $2 billion annually between 2025 and 2026.

Total distributions to shareholders averaged $1.9 billion over the past two years.

[ CRH now ‘de facto American’ even as base remains in Dublin, says chief ]

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CRH, led by chief executive Albert Manifold, said in March that it planned to spend $3 billion on a buy-back programme over 12 months to the same month next year. It had spent more than $4 billion over the previous five years repurchasing and cancelling stock.

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While Fitch said that CRH’s high reliance on the “resilient” infrastructure and renovation end markets would “mitigate some pockets of weakness, mainly in the new-build residential and commercial end-markets, especially in Europe” as the wider global economy remained “soft” in the near term.

CRH announced in early March that it was looking to move its main stock market listing from London to the United States in a bid to improve its chances of securing lucrative contracts under a $1.2 trillion US infrastructure programme to run until 2026.

That would end the group’s association with the Irish Stock Exchange, which dates back to the 1936 flotation of Irish Cement. CRH was formed in 1970 through the merger of Irish Cement and Roadstone.

“This is a golden age of construction in the United States,” Mr Manifold, who has led CRH since 2014, told investors at the company’s annual general meeting last month, noting that US president Joe Biden highlighted in his state of the union address in February that infrastructure funds would be spent “to buy American”.

CRH also hopes that by moving its main listing to the US it will benefit from the fact that Wall Street-listed companies typically trade at a premium to European-quoted companies, relative to earnings.

[ CRH says investor backing for US listing ‘strong’ as earnings rise ]

Fitch, which has a BBB+ rating on CRH’s creditworthiness, seven levels below the firm’s top-notch AAA grade, expects the Irish corporate giant to spend about $5 billion on acquisitions between this year and 2026, mainly made up of “small bolt-on” deals.

It spent $3.3 billion on acquisitions and investments last year, more than double its outlay for 2021. It also generated $3.9 billion from the sale of unwanted assets last year.

CRH saw its net debt decline to 0.9 times earnings before interest, tax, depreciation and amortisation (ebitda) by the end of last year from a ratio of 1.3 times in 2021, through a combination of reduced borrowings and higher earnings. Its net debt stood at $5.1 billion at the end of the reporting period.

Fitch expects CRH to maintain a “a strong leverage profile” with net debt at one to 1.5 times Ebitda over the next four years.