Saturday, December 2, 2023

CRH on course for record year as it reports 8% increase in sales

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Building materials giant CRH is expecting to deliver a full year profit “well ahead” of the $3.5 billion (€3.2 billion) it generated in 2022 after reporting an 8 per cent increase in group sales in the third quarter in a trading update on Tuesday.

The update is the company’s first since it delisted from the Irish Stock Exchange – now known as Euronext Dublin – in September, and made the move to the New York Stock Exchange. It remains headquartered and tax resident in Ireland.

CRH was formed in 1970 through the merger of the already publicly quoted Irish Cement, which floated in 1936, and Roadstone companies. It was the largest company on the Irish market by a distance before it delisted.

The company said group sales for the nine months ended September 30th amounted to $26.3 billion, which represents an increase of 8 per cent compared with the corresponding period in 2022, or 3 per cent on a like-for-like basis.

“The positive momentum experienced in the first half of the year continued into the third quarter, underpinned by strong commercial progress and positive underlying demand across key end-use markets,” the company told investors.

The group’s earnings before interest, taxes, depreciation, and amortisation (EBITDA) was $4.8 billion, which was 14 per cent ahead of last year, or 9 per cent ahead on a like-for-like basis.

It said the performance reflected the “continued delivery of our integrated solutions strategy, strong commercial management, and operational efficiencies”.

The company is projecting its full-year depreciation and amortisation to be slightly higher than the $1.7 billion it was in 2022 due to the impact of acquisitions.

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Net finance costs are expected to be lower than the $376 million in 2022, primarily due to higher interest income.

In terms of outlook, CRH said it was raising its guidance and that it expects to deliver full-year EBITDA of $6.3 billion, which would be up from $5.6 billion last year and would represent a record year for the company.

It is also projecting a full-year net cash inflow from operating activities of $5 billion as against $4 billion last year. Year-end net debt is expected to be $7 billion, which would be up from $5.1 billion.

“Looking ahead to 2024 and notwithstanding some macroeconomic uncertainties, we expect resilient underlying demand across our key end-use markets in North America and Europe, underpinned by significant public investment in infrastructure and increased re-industrialisation activity in key non-residential segments,” it said.

“While new-build residential construction is expected to remain subdued, we expect positive pricing momentum to continue, supported by good commercial management and the benefits of our integrated and value-based solutions strategy.”

It said the board has decided to accelerate the payment of the 2023 dividend by distributing a second interim dividend of $1.08 per ordinary share in lieu of a final dividend, resulting in a full-year dividend per share of $1.33 for 2023, which is an increase of 5 per cent.

During the first nine months of the year, the group realised proceeds of $64 million from the disposal of surplus property, plant and equipment and other non-current assets. There were no business divestments completed during the period.

CRH chief executive Albert Manifold described the year so far as “another strong performance for our business”.

“Our integrated solutions strategy continues to deliver superior growth, while our strong cash generation and disciplined approach to capital allocation enables us to create additional value for our shareholders,” he said.

“Looking ahead to the remainder of the year, we are raising our guidance and expect to deliver full-year EBITDA of approximately $6.3 billion, representing another record year for CRH.”

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