CRH seen with €10.9bn ‘war chest’ after latest unit sale

Disposal of North American glass unit due to complete shortly

CRH may be left with the firepower to spend over $12 billion (€10.9 billion) on deals after the completion of the recently agreed sale of its North American glass building products unit, according to analysts in Cantor Fitzgerald Ireland.

The receipt of $3.45 billion of cash from the deal in the middle of this year, together with an estimated $2.65 billion of operating cash flow that CRH will generate in 2022, after capital expenditure, will see the building materials giant's net debt falling to $1.23 billion by the end of 2022, Cantor Fitzgerald analyst Ian Hunter said in a note published on Wednesday.

The company’s net debt stood at $6.26 billion at the end of 2021.

The expected reduction would push the group's net debt down to 0.2 times earnings before interest, tax, deprecation, and amortisation (ebitda). That is one-tenth of the two-times leverage ratio that CRH's new chief financial officer, Jim Mintern, said on that the group would be "quite comfortable" with.


“For a company with a record of growing through acquisitions, this could, in theory, give a war chest of over $12 billion,” said Mr Hunter. A spokesman for CRH declined to comment.

CRH chief executive Albert Manifold has committed the equivalent of $17.7 billion to acquisitions since he took charge of CRH eight years ago, including $1.5 billion spent on 20 deals last year.

Selling businesses

However, he has raised $8.5 billion over the same period selling businesses that were no longer delivering the required returns or growth potential, or otherwise not justifying continued existence within the group. The figure will reach $12.3 billion after the disposal of the North American glass building products unit, known as Oldcastle Building Envelope, is completed.

CRH also has a track record of carefully weighing the benefits of spending money on acquisitions against returning capital to shareholders. The company has handed back $6.5 billion to investors since 2017 by way of share buyback sand dividends, according to its latest annual report, published last week.

Mr Hunter said that that it more likely that CRH's share price decline so far this year is down to the effect of soaring energy and commodity prices on the wider sector, rather than the company's limited exposure to Russia and Ukraine. The company's stock is down about 16 per cent so far in 2022, following a small rally in the share price on Wednesday.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times