CRH looks to more acquisitions as US trade boosts profit

Building materials giant, CRH, could make further large acquisitions this year as banks force rivals to sell to clear recession-era debts, according to chief executive, Albert Manifold.

The Irish multi-national spent €6.5 billion buying a group of companies that regulators demanded that competitors Lafarge and Holcim sell as a condition of their merger last year.

Speaking after CRH reported a 36 per cent increase in pre-tax profits to €1.03 billion for 2015 on the back of a strong US performance, Mr Manifold said that it would consider further big deals if the right opportunity arose.

He pointed out that lenders are now beginning to put pressure on companies that borrowed heavily in the run up to the recession, but which have yet to clear those liablities.

“The banks are entering a phase where they less forgiving, the proof of that is you are seeing more and more businesses on the block or more and more discussion of businesses for sale,” he said.

“Those balance sheets are going to have to be fixed and businesses are likely to up for sale.”

Mr Manifold added that those opportunities are likely to crop up all around the world and said that CRH could “cherry pick” better opportunities according to region or other factors.

The Irish group’s own financial position is strong. Its €6.6 billion net debt on December 31st was three times its €2.2 billion earnings, a ratio that was lower than the figure that CRH indicated it would be.

Its cash flow grew 50 per cent to €1.3 billion last year. It ended 2015 with €2.5 billion in cash and a further €3.1 billion in committed but unused credit from its lenders.

The company said revenues for the year rose by 25 per cent to €23.6 billion on the back of "positive momentum" in the Americas and more mixed market conditions in Europe.

It also noted that the businesses that it bought from Lafarg and Holcim delivered better-than-expected profits.

In Ireland, CRH said construction growth was supported by improvements across all sectors, primarily non-residential, albeit from a low base.

Mr Manifold predicted that the same pattern to continue in 2016 but welcomed indications that infrastructure spending could pick up.

While cement volumes grew by 17 per cent, pricing was under pressure in competitive markets, it said.

“As a result of good performance from our heritage businesses and contributions from acquisitions, 2015 was a year of significant profit growth for CRH,” Mr Manifold said.

“Recently there has been some uncertainty about the pace of global growth. Our focus remains on consolidating and building upon the gains made in 2015, and against this backdrop we believe 2016 will be a year of continued growth for the group.”

The board is recommending a final dividend of 44 cent per share, giving a total dividend of 62.5 cent for the year. This is in line with last year while it is covered 1.4 times by earnings of 89.1 cent a-share.

CRH plc

Revenue: €23.6 million +25%

Pre-tax profit: €1.04 billion +35%

Earnings per share: 89.1 cent +13%

Dividend: 62.5 cent +0%