CRH sees first-half earnings ‘well ahead’ of last year as US economy recovers

CRH, the largest company on the Iseq stock index in Dublin, expects first-half earnings to be "well ahead" of the same period last year, which was affected by Covid-19 restrictions on both sides of the Atlantic.

The building materials giant posted $1.6 billion (€1.33bn) of earnings before interest, tax, depreciation and amortisation (ebitda) for the first six months of 2020.

"Despite near-term uncertainties, we expect group ebitda for the seasonally less-significant first half of the year to be well ahead of the first half of 2020 which was adversely impacted by Covid-19 related disruption in the second quarter," the company, led by chief executive Albert Manifold, said in a trading update on Wednesday.

“We anticipate further normalisation in our markets in the second half of the year as the health situation continues to improve. Given the resilience of our business model and strength of our balance sheet, we remain well-positioned to benefit from the growth opportunities that lie ahead.”

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On a call with analysts, Mr Manifold said that with the “improving health situation in the United States, the economy has started to motor”. Some 43 per cent of the country’s population have received at least one Covid-19 vaccination jab, according to the US Centers for Disease Control and Prevention. He said European economies are also picking up.

Residential construction

The company said first-quarter like-for-like sales rose 3 per cent. Building products sales across Europe and the Americas jumped 12 per cent, reflecting strong demand for residential construction, particularly in North America, partly offset by lower activity levels in the non-residential sector, CRH said.

“Building products saw impressive growth, led by the architectural products group where like-for-like sales rose 27 per cent year-on-year,” said Davy analyst Robert Gardiner. “That business benefited from strong demand for outdoor products and early season purchasing by US homecentres.”

While overall Americas’ materials sales were down 1 per cent on the first-quarter of 2020, cement sales volumes were up 5 per cent in the Americas and the company was able to push through 4 per cent price increases in the US and Canada.

Like-for-like Europe materials sales were up 1 per cent. Sales in the UK were ahead with strong volumes across most lines of business, supported by good demand in the infrastructure and residential sectors, it said.

In France, cement volumes were well ahead of the prior year which was affected by Covid-19 related shutdowns. Adverse weather hit activity levels in Finland and Germany while Covid-19 restrictions in Ireland resulted in lower cement volumes.

Acquisitions

The group has spent about $200 million on four acquisitions so far this year, the largest of which was a pipe and precast concrete business, expanding its infrastructure products footprint in the US midwest.

CRH also completed the €200 million sale of its Brazil cement business as well as two smaller transactions, resulting in total business and asset disposal proceeds of about $300 million.