Group could fund €1bn of new assets in the current year

An active expansion programme could see CRH spending up to €1 billion (£787.56 million) on acquisitions and capital expenditure. Chief executive Don Godson said yesterday that he would be surprised if CRH does not spend at least as much as last year's €600 million on acquisitions. Finance director Harry Sheridan said that the group could comfortably handle €1 billion worth of acquisitions "but we won't be spending it on one company".

On CRH's reported interest in the Scandinavian group Scancem, which has been put up for sale by its majority shareholders, Mr Godson said that CRH is interested in parts of the business "although the information we have go on so far is rudimentary".

CRH is understood to be one of five European bidders that have been asked to make indicative offers for all or parts of Scancem.

CRH director Brian Griffin, who looks after CRH's materials business in Europe said that it is unlikely that any potential buyer will bid for all of Scancem and added that, in any event, Scancem's Finncementi operation in Finland has to be separated from the other Scandinavian businesses within the group.

CRH's main interest is thought to be Finncementi and the Castle Cement operation in the UK, which has 25 per cent of the British cement market.

"Castle is a business we understand, but its value has to reflect where it can go in the future," he stated. Analysts believe that Castle could command a price of over €600 million, and this is well within CRH's ability given the strength of its balance sheet and its huge cash-generating ability.

Last year, CRH made 25 different bolt-on acquisitions at an average cost of €8 million each. "That's about two a month and that doesn't happen by chance. You have to be set up to do that," Mr Sheridan said, adding that the group has 14 different investment teams looking for acquisitions in the various geographic locations.

He said that CRH would aim to enhance its presence in the so-called emerging markets in Poland and South America. CRH has already spent €150 million investing in Poland, and while the Ozarow business suffered last year from low prices, Poland is likely to be the focus of a steady expansion. CRH has already expanded its Polish business into downstream areas such as ready-mixed concrete and paving.

"Poland in 10 years time could be bigger than our Irish operations," said Mr Godson. "At this very minute we sell more cement in Poland than in Ireland."

Mr Sheridan said that currently there is a rough 50-50 split between CRH's American and European business and added "this is a powerful cocktail." He added that the group would aim to increase its exposure in developing companies by 2000. "Our policy would be to have about 45 per cent in America, 45 per cent in Europe and 10 per cent in developing economies like Poland and South America."