CRH shares rise on €510m Benelux disposals
Building materials giant sells off retail business in Netherlands and Belgium
The CRH offices on Fitzwilliam Square. Earlier this year, CRH sold its US distribution business, Allied Building Products, for $2.6 billion (€2.24 billion). Photograph: Brenda Fitzsimons
CRH shares rose on Wednesday after the building materials giant said it had sold its do-it-yourself (DIY) retail business in the Netherlands and Belgium back to the business’s Dutch franchise operator, Intergamma.
The company has also sold a number of properties related to the operation to US real-estate investment trust WP Carey. The two transactions have generated a combined €510 million for CRH.
Shares in CRH ended the session in Dublin 1.6 per cent higher at €30.74.
The sale comes less than two months after CRH signalled that it is preparing to sell its low-margin European distribution businesses as it carries out a strategic review of the division and set out new financial targets for the next four years. Market sources said that the distribution unit, which supplies materials to professional builders, heating and plumbing contractors as well as DIY customers in continental Europe, could generate a total of up to €2.4 billion.
“The disposal of CRH’s Benelux DIY should not come as a great surprise,” said Davy analysts Robert Gardiner and Barry Dixon in a note to clients. “This further strengthens CRH’s balance sheet and provides it with financial strength to pursue its medium-term growth ambitions.”
The Davy analysts said the Benelux DIY business sale does not signal that CRH had completed its strategic review of the wider European distribution division and taken the formal decision to sell all of it.
German DIY unit
“The decision was driven by the fact that CRH did not have a route to control this business, given its franchise arrangement,” they said, noting that the company, led by chief executive Albert Manifold, still retains its German DIY unit.
Earlier this year, CRH sold its US distribution business, Allied Building Products, for $2.6 billion (€2.24 billion) as it maintained a strategy pursued by Mr Manifold since taking over the helm in early 2014 of selling underperforming assets or businesses that no longer fit its model.
CRH said in late May that it plans to have financial capacity to spend €7 billion by the end of 2021 on investments and deals to create value for shareholders. Analysts expect that most of the money will be spent on acquisitions, even as it recently launched its first share buyback programme in a decade.
“It is clear that CRH remains focused on developing a high-performance culture in which underperformance is actively managed,” said Robert Eason, an analyst with Goodbody Stockbrokers.