CRH says EU distribution unit has attracted ‘a lot’ of interest
Decision to be made within the next three months on whether to sell the unit
Albert Manifold, CRH chief executive. Photograph: Nick Bradshaw
CRH chief executive Albert Manifold said on Thursday the group has attracted “a lot” of interest in its European distribution business and that a decision will be made within the next three months on whether to sell it.
Speaking to reporters after the building materials giant’s annual general meeting (agm) in Dublin, Mr Manifold declined to comment on reports that CRH has hired Bank of America to sell the unit, which analysts value at about €2 billion. The company said a year ago that it was carrying out a strategic review of the business, which has had a mixed performance in recent years.
“The minute you announce a strategic review, people say, ‘This is for sale’,” Mr Manifold said, adding that CRH faces a “binary option” in working out what it could raise from a sale now versus what it would generate by improving the profit potential of the business.
He noted that private equity firms, in particularly, have been active in this space in the past decade. Reuters reported earlier this month that the unit had already drawn bid interest from buyout funds including Lone Star, CVC and Advent.
Earlier, the agm heard that 15.5 per cent of shareholders voted against CRH’s directors’ remuneration report and 13.3 per cent opposed its new pay policy which will span the next three years.
Mr Manifold’s total compensation dipped 5 per cent last year to €8.25 million as a slump in CRH’s share price hit total shareholder returns. However, chief financial officer Senan Murphy’s package rose to €2.72 million from €1.9 million.
Defending the new policy, which includes increases in bonus deferrals and gives the CRH greater powers to claw back awards, head of the remuneration committee, Richie Boucher, the former Bank of Ireland chief executive, said the group engaged extensively with major shareholders on the matter in the past year.
“We believe the people we employ are very good. We compete on an international scale,” Mr Boucher said, adding that he believes that incentive targets for the business are “stretching”.
CRH said in a trading update on Wednesday that it plans to follow up in its recently-completed €1 billion share buy-back programme by acquiring a further €350 million of its own stock before it reports interim results at the end of August.
It expects earnings before interest, tax, depreciation and amortisation (ebitda) for the seasonally less significant first half of the year to rise to more than €1.5 billion from €1.13 billion a year earlier, boosted by the integration of Ash Grove Cement in the US, which it accrued last year for $3.5 billion (€4.05 billion).
CRH forecast its like-for-like ebitda for the second half to beat the €2.24 billion result for the same period of last year.
However, Mr Manifold said on Thursday that Brexit-related uncertainty was having an impact on large infrastructure projects in the UK that require government funding.
“It’s not just one project, it’s a whole range of projects,” he said. “There seems to be a reluctance to commit funding to large infrastructure projects from the treasury to the county councils and here we are at the end of April. They should have started by now.”