Pandemic triggers spike in demand for single-family homes, CRH chief says

Building materials giant reports strong numbers despite pandemic disruption

CRH chief executive Albert Manifold. Photograph: Cyril Byrne

CRH chief executive Albert Manifold. Photograph: Cyril Byrne

 

The “most pronounced” housing trend to emerge from the Covid crisis is the increased demand for single-family homes, the head of building materials giant CRH has said.

Albert Manifold was speaking as the company published full-year results for 2020, which showed overall sales dipped by 2 per cent to $27.6 billion (€23 billion ) last year.

Earnings before interest, tax, depreciation and amortisation (Ebidta), however, rose 3 per cent to $4.6 billion as the company cut costs and moved to mitigate the financial impact of the pandemic.

Construction

In the context of restrictions that curtailed construction in several countries, CRH described the performance as “robust”.

Discussing the likely trends to emerge from the crisis, Mr Manifold said the company had witnessed a big shift on the residential side of the market in Europe and North America in favour of single-family homes.

Prior to the pandemic, the strongest growth area was in multi-family developments or apartment blocks. This has switched, Mr Manifold said, with more people seeking homes into suburbs with more space. The trend is underpinned by the increased incidence of remote working, he said.

Working from home, even for one of two days a week, means that a home buyer can justify living farther from work, he said.

Mr Manifold said this was probably “the most pronounced” and sustainable trend to come out of the Covid crisis.

Construction of one-family homes in the US climbed to the highest level in more than 13 years in 2020.

On whether the company might review its relationship with Davy, which acts as CRH’s corporate broker in Ireland, in light of recent revelations of financial wrongdoing at the brokerage, Mr Manifold declined to comment.

In terms of its own performance, CRH said recovery in the second half of the year was not enough to outweigh the negative impact of ongoing Covid-related closures. Nonetheless it saw further improvements in its pretax earnings and in its margins.

Sales

The company said like for like sales in its Americas business fell 3 per cent year on year to $11.3 billion, mainly due to Covid-19 restrictions, which led to project delays in several US states.

While economic activity in North America took a big hit, this was partly offset by government stimulus, it said.

The company said its European materials unit saw recovery in volumes in the second half of 2020, but this was not enough to offset the impact of earlier shutdowns with overall sales revenue down 4 per cent on 2019 at $9.1 billion.

CRH said its building products division benefited from strong residential repair, maintenance and improvement (RMI) activity in North America and that offset lower activity levels in non-residential markets to deliver revenue growth of 3 per cent to $7.2 billion.

CRH said it was recommending a final dividend of 93 cent per share, resulting in a total dividend of 115 cent for the year, an increase of 25 per cent on 2019, marking 37 years of dividend delivery.

It also announced a resumption of its share buyback programme, which was halted last year in the face of pandemic-related uncertainty. The company plans to return an additional €300 million to investors in June.

“Through the repositioning of our business in recent years and our relentless

focus on continuous business improvement, we have delivered record levels of profitability, margins and cash generation,” Mr Manifold said. “Although the near-term outlook remains uncertain, our unique portfolio of businesses together with the strength of our balance sheet leaves us well positioned to capitalise on the growth opportunities that lie ahead.”