Development spending is up €575m with 31 acquisitions

CRH increased its development spending by €575 million in the second half of 2005 with 31 acquisitions and three new capital projects.

After difficulties completing acquisitions in 2004 and early 2005, the latest deals bring the group's second-half expenditure to €1.2 billion and full-year spending to €1.45 billion.

Analysts were encouraged by the news. The deals "should allay concerns earlier this year that acquisition opportunities had dried up", said John Sheehan of NCB Stockbrokers.

CRH finance director Myles Lee said in a conference call yesterday that the companies acquired in the second half had annual sales of some €1.1 billion. The annualised sales of all acquisitions in 2005 amounted to some €1.5 billion and the average profit margin in these operations was over 7 per cent.

Those figures exclude sales at Spanish group Corporación Uniland, in which CRH took a 26.3 per cent stake last month at a cost of €300 million. CRH wants to build that stake, but chief executive Liam O'Mahony said it has no agreement to buy out the other shareholders.

The biggest spending in the second half was in the European products and distribution unit, where CRH spent €358 million on nine acquisitions. This included five smaller deals and four "significant" transactions.

CRH bought French concrete products firm Stradal, with annual sales of €173 million, in August. In October it bought German building products group Reuss-Seifert, with sales of €55 million, and Austrian builders merchant Quester, with sales of €250 million. It took a 47.8 per cent stake last month in German builders merchant and DIY firm Buaking, which has annual sales of €531 million.

The next biggest spending was in the Americas products and distribution division, where CRH spent €171 million on 10 deals and three projects. This included four acquisitions in the architectural products group (APG), among them assets in companies such as North Carolina block manufacturer ST Wooten and Atlanta firm Earth Pak.

CRH spent €31 million on eight materials operations in the US, five of them in the west region and one each in the central, New York/New Jersey and New England regions. It also spent €15 million on four deals in its European materials unit.

This includes the purchase of an extra 31 per cent of Polish concrete block producer Bazaltex, bringing its stake to 80 per cent. It also bought two businesses in Finland.