CRH eyes record $5.25bn earnings as price increases offset cost inflation

Irish company’s margin widened in first nine months of 2021 to 17.1%

CRH chief executive Albert Manifold said the company ‘continues to perform well with good underlying demand and pricing progress across our key markets’. Photograph: Cyril Byrne

CRH chief executive Albert Manifold said the company ‘continues to perform well with good underlying demand and pricing progress across our key markets’. Photograph: Cyril Byrne

 

CRH is on track to report record full-year earnings amid strong demand for building materials on both sides of the Atlantic, with the group managing to offset rising input cost through price increases for its products.

The Dublin-based building materials group expects to post full-year earnings before interest tax, depreciation and amortisation (ebitda) of $5.25 billion (€4.67 billion), it said in a trading statement on Tuesday. Its previous record earnings was in 2019, when it reported a figure of $4.39 billion.

The company’s ebitda margin widened by 0.5 percentage points in the first nine months of the year, to 17.1 per cent, defying a wider industry trend that has seen margins contract in recent times.

Shares in the company rose by 3.4 per cent in Dublin to €45, their highest level since late August.

“CRH continues to perform well with good underlying demand and pricing progress across our key markets,” said chief executive Albert Manifold. “Our uniquely integrated and solutions-focused business model has supported further margin expansion across our businesses, while our strong cash generation and disciplined approach to capital allocation provides further opportunities to create value for all of our stakeholders.”

Underlying demand

Cumulative nine-month sales to the end of September amounted to $22.8 billion, an increase of 11 per cent compared with the corresponding period in 2020 and 7 per cent ahead on a like-for-like basis. First-half growth moderated in the third quarter as easing pandemic-related restrictions in the third quarter of 2020 resulted in a strong prior year comparative, it said.

Looking ahead to 2022, CRH said it expected the “positive underlying demand and pricing backdrop to continue albeit against an inflationary input cost environment”.

The company said it was “encouraged” by the passing of the $1.2 trillion infrastructure package by the US Congress this month, which significantly increases the commitment to future infrastructure investment in the country.

CRH has spent $1.4 billion on 17 bolt-on acquisitions so far this year, including $500 million on deals since it last updated the stock market on trading in August. Mr Manifold told analysts the company continue to have a “very healthy pipeline” of deals.

The group has raised $400 million from the sale of unwanted assets so far in 2021, with the proceeds including $100 million of deferred proceeds from prior-year divestments.