Sales, profit rise at CRH amid lifting of Covid restrictions

Building materials groups increases interim dividend as its outlook remains upbeat

Chief executive of CRH Albert Manifold.  Photograph:  Nick Bradshaw

Chief executive of CRH Albert Manifold. Photograph: Nick Bradshaw

 

CRH believes US lawmakers will this autumn back president Joe Biden’s plans to spend $1 trillion (€850 billion) on infrastructure, boosting the Irish group’s North American businesses.

Speaking after the Dublin-based building materials giant said first-half profits doubled to more than $1 billion, CRH chief executive, Albert Manifold, predicted the US Congress would approve federal spending plans “some time in the early fall”.

He calculated that this would boost spending on road building and other public projects across the US, where CRH earns half its revenues, by around 35 per cent annually for the next five years.

“We think it will be very good for our industry and very good for CRH,” Mr Manifold said.

The Irish group is one of the biggest construction products suppliers in the US, and the largest producer of road-building materials.

Strong sales

CRH said sales for the first six months of 2021 were 15 per cent higher than the previous year at $14 billion, as the underlying backdrop in both Europe and North America remained positive.

Pre-tax profit doubled to $1 billion for the period, compared with $518 million in 2020, when the pandemic heavily impacted the second quarter of the year.

Earnings before interest, tax, depreciation and amortisation were up 25 per cent to $2 billion, with earnings per share surged 95 per cent to 100.1 cents. CRH said the latter reflected higher trading profits along with the profit on divestment of its Brazil cement operations. Operating cash flow was $1.6 billion, a rise of 55 per cent.

In Ireland, the easing of Covid restrictions in the second quarter of the year led to an uplift in demand and drove sales significantly ahead of the first half of 2020. The UK also saw sales surge significantly compared to the prior year.

In the Americas, like-for-like sales rose 3 per cent compared to 2020, as volumes of aggregates, cement and readymixed concrete improved. CRH’s European material business also saw strong volume growth compared to a period that was heavily impacted by Covid-19 restrictions, with like for like sales up 17 per cent.

Strong activity in the residential repair, maintenance and improvement market in North America drove growth in the building products section, with like-for-like sales 8 per cent higher compared to 2020.

Some $1.1 billion has been invested in the year-to-date on acquisitions and expansionary capital expenditure.

Rising energy and labour costs boosted expenses during the period, but the group successfully passed this on to customers, increasing margins by more than 1 per cent.

Mr Manifold expects this trend to continue as governments and private companies continue spending on construction. “We will be able to protect our margins going forward,” he said.

Looking ahead, CRH said it expected the second half of the year to be ahead of 2020, which set records for the the company, as the market outlook continued to improve.

Mr Manifold said the strength and resilience of CRH’s business model had delivered “superior performance” for the company.

“Our integrated and solutions-focused approach leaves us uniquely positioned for the changing needs of construction, while our continued strong cash generation provides us with the flexibility to invest in future growth opportunities for our business,” he said in a statement. “Based on current trading conditions and the positive momentum that we see across our markets, we expect second-half group EBITDA to be ahead of a record prior year.’’

CRH said it would increase the interim dividend to 23 cents per share, up 4.5 per cent year on year.