CRH spent €168m on acquisitions in six months

BUILDING MATERIALS giant CRH spent almost €170 million buying up smaller rivals in the second half of last year.

In a trading statement yesterday, CRH repeated its prediction of late last year that it expected 2009 profits before tax to be about €750 million, a fall of 55 per cent on the previous year, while it expected earnings to be down one-third at €1.8 billion.

Ireland’s biggest company said it spent €450 million on acquisitions last year, €168 million of which was between June 30th and the end of December.

In the week before Christmas, its US subsidiary, Apac, bought Texas-based asphalt and readymixed concrete producer Wheeler.

Also last month, it bought a number of asphalt and stone suppliers from multinational competitor Lafarge. CRH said the businesses, based in Missouri, were well positioned to take advantage of growth along the corridor connecting Kansas city with St Louis.

In the same state, the Irish company bought integrated asphalt, stone and construction business Hilty Quarries.

Other US purchases included Backus Pit, a stone quarrying operation near Salt Lake City; Burdick Paving in Utah; and assets of Cleason, including a limestone quarry, in the northeastern US.

CRH said it spent a total of €146 million buying building materials businesses in the US.

It said it expected them to boost earnings before tax, interest and write-offs by $200 million (€139 million) a year.

CRH said that, during the same six-month period, it spent €22 million on increasing its holdings in Polish brick manufacturer Grupa Silikaty and Chinese cement producer Yatai.

The group signalled that it intended to remain on the acquisitions trail for the time being. CRH chief executive Myles Lee said the company remained “well positioned to take advantage of further development prospects as they arise”.

Last year, CRH raised €1.24 billion from shareholders, part of which it intends to spend on acquisitions. The company believes that as the global recession has hit its industry particularly hard, businesses will be put up for sale at potentially attractive prices.

CRH typically focuses on buying smaller rivals that can be easily absorbed into the group and which bring with them some sort of strategic advantage, such as a foothold in a new region. The group indicated yesterday it would stick to this policy.

As expected, CRH has begun an appeal against a €25 million fine for price-fixing in Poland. The country’s competition authority imposed the penalty on the Irish group last month.

However, CRH reacted by saying it was going to appeal and argued that the Polish Office of Competition and Consumer Protection had failed to take all of the relevant evidence into account.

The company will save €260 million this year through cost-cutting measures it implemented in 2009.

Analysts said CRH’s earnings and profit predictions were in line with market expectations and did not really vary from a management statement released in November.

However, despite the company’s forecasts remaining the same, investors greeted the statement with disappointment.

CRH’s share price fell by more than 3 per cent yesterday in Dublin, losing €1.15 to close at €18.75.

The fall was largely due to CRH’s statement that trading conditions remained difficult and that it was hard to predict when international construction markets would recover.

“Management remains focused on ongoing cost reduction and operational initiatives which will benefit our performance in 2010,” the group said.