CRH acquisitions war chest expected to near €700m
Irish building materials group records 2017 pretax profit of €2 billion, up 15 per cent
CRH chief executive Albert Manifold indicated the company was likely to pursue further acquisitions this year. Photograph: Cyril Byrne
CRH said on Thursday that its profit before tax rose 15.2 per cent to €2 billion last year.
The group will finalise its purchase of US cement maker Ash Grove for €3 billion at the end of March. Chief executive Albert Manifold indicated that CRH was likely to pursue further acquisitions this year. “We have a good pipeline of deals but we are selective,” he said.
Senan Murphy, CRH’s chief financial officer, noted that it expects to generate about €2 billion in cash every year, some of which would be reinvested or returned to shareholders in dividends.
“About one third is available to be spent on doing deals for this year, next year and going forward,” Mr Murphy added.
CRH has spent €13 billion on acquisitions in the past five years and earned €5 billion from selling some of its businesses over the same period of time.
Mr Manifold did not rule out selling further operations this year. “I would not say yes or no,” he said.
He pointed out that CRH valued businesses on the basis of the cash and profits that they can generate over time.
If the group believed that it would get a better return from selling individual subsidiaries and reinvesting the returns in ongoing operations, then it would do so, he said.
US president Donald Trump’s tax reforms, which slashed levies on company profits to 21 per cent from 35 per cent, should save CRH about €15 million on its tax bill, its chief executive indicated.
Mr Manifold noted that the group paid about €500 million tax in total across its businesses in 2017 and calculated that the US cuts would knock “three percentage points” of that figure.
CRH’s shares climbed more than 2.1 per cent to €27.85 in early trading on the Irish Stock Exchange after the group published its results, but slipped back to €27.50 before the market closed. That was a rise of just under 1 per cent.
Sales from both continuing and discontinued operations grew 2 per cent in 2017 to €27.56 billion from €27.1 billion the previous year.
CRH’s earnings per share surged more than 50 per cent to 226.8 cent a share from 150.2 cent.
The group is proposing to pay shareholders a dividend of 68 cent a share, an increase of about 4 per cent.
It is one of the biggest players in the US market, where it is a leading supplier of asphalt, which is used to surface roads.
The group described 2017 as a year of growth, with increases in demand in the Americas and positive momentum in Europe.
Operating profit in its Asia division, formed from businesses acquired in the Philippines in 2015, fell 79 per cent to €15 million.
Mr Manifold said CRH was in the country for the longer term. He argued that the group had moved into eastern Europe more than 20 years ago and endured some “very tough years” in its Polish business in the mid-1990s.
He said eastern Europe had higher growth in construction than the rest of the continent. “I expect to be delighted by profits from the Philippines in 20 years’ time,” Mr Manifold added.
CRH predicted that 2018 would be a year of continued growth for the group, aided by a balanced range of businesses well positioned to capitalise on ongoing economic recovery.