Building materials group CRH is a firm favourite with investors / Image source: Adobe
  • Strong demand and pricing drive sales
  • Full-year guidance raised again
  • Shares trading at record highs

Investors in Dublin-based building materials group CRH (CRH) have every right to feel smug given that with all the negative sentiment surrounding the UK construction sector the firm’s shares have been hitting new lifetime highs.

The positive mood continued this morning with the shares rising 2% to £48.44 after the group posted a solid nine-month trading update and raised its full-year earnings outlook for the second time in three months.

HOW IS CRH DOING IT?

The company makes and supplies aggregates, cement, lime, ready-mix concrete, asphalt and paving as well as construction services to the US and European building markets.

To give an idea of scale, sales in the first nine months of the year were $26.3 billion which is more than Swiss rival Holcim (HOLN:SWX) – which includes the French materials giant Lafarge – made in the whole of last year.

CRH makes most of its sales (63%) in North America, where it is the leading supplier of building materials and where nine-month materials sales were up 7%, while building solutions sales were up 15% helped by price increases and acquisitions, which helped offset lower activity in some regions due to adverse weather.

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European materials solutions were up 6% over nine months thanks to a 17% jump in the third quarter driven by ‘good commercial management’ and a currency tailwind which offset lower activity levels, and building solutions sales grew 8% thanks to prior-year acquisitions as the new-build market remains ‘subdued’.

M&A (mergers and acquisitions) form an important part of CRH’s growth strategy, and the firm announced the $2.1 billion purchase of a portfolio of cement and ready-mix concrete assets in Texas, an attractive high-growth market for the group, complementing the $700 million it has already spent this year on smaller bolt-on acquisitions.

RAISING GUIDANCE, AGAIN

‘I am pleased to report another strong performance for our business’ commented chief executive Albert Manifold.

‘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.’

Based on current trading ‘and the momentum we see across our business’, Manifold raised the firm’s guidance for full-year EBITDA (earnings before interest, tax, depreciation and amortisation) to around $6.3 billion from the previously-raised forecast of $6.2 billion and cut its gearing target to 1.1 times net debt to EBITDA from the previous range of 1.1 to 1.3 times.

LEARN MORE ABOUT CRH

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Issue Date: 21 Nov 2023