CRH not ruling out further share buybacks

Building materials giant CRH is not ruling out further share buybacks to follow the €900 million it is returning to investors this year.

The news came as the Irish group said earnings rose 36 per cent in the first six months of 2019 to a record €1.54 billion.

CRH’s revenue increased 11 per cent to €3.2 billion, while earnings per share from continuing operations were 51 per cent ahead of the same period in 2018 at 67.8 cent.

The group plans to continue a share buyback programme with a further tranche of €350 million to be completed by the year’s end, which would result in a total of €900 million being returned to shareholders in 2019.

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Speaking after CRH published its first-half results on Thursday, Senan Murphy, group finance director, indicated that it could consider similar moves to return cash to investors in the near future.

Mr Murphy explained that CRH kept share buybacks “constantly under review” and would look at factors such as cash flow, the company’s balance sheet and where in the business needs to allocate capital, before deciding on further such moves.

“Let’s figure out 2020 as we get into the second half of 2019,” he said. CRH’s board also approved an interim dividend of 20 cent a share, a 2 per cent increase on the 19.6 cent the group paid investors at the midway stage last year.

CRH continued to refine its portfolio during the six-month period. It sold subsidiaries worth €2 billion in total and spent €500 million on acquisitions.

Chief executive Albert Manifold said the group would continue with its policy of buying smaller "bolt-on" businesses, but added that it would consider bigger deals should the right opportunity arise.

Brexit

Mr Manifold also acknowledged that Brexit uncertainty had hit the Irish group’s UK business.

He said CRH supplied materials to big infrastructure projects such as transport and energy in Britain, but the government there had slowed spending in these areas markedly since voters opted to leave the European Union in 2016.

“There are very low levels of infrastructure spending here in the Republic and the UK is getting close to those levels,” Mr Manifold said.

He added that the British government had limited spending on infrastructure to maintenance.

However, Mr Manifold stressed that the UK would have significant future “construction needs” and indicated that CRH intended to maintain its businesses there.

CRH makes and sells asphalt, cement and concrete across Europe and the US. Its profit before tax rose 40 per cent in the first six months of the year to €707 million from €497 million during the same period in 2018. Earnings per share rose at the same rate to 67.8 cent from 45 cent.

Net debt on June 30th was €10.2 billion, €2.1 billion higher than the figure that CRH reported 12 months earlier. The group attributed this to a change in rules governing how companies account for leases.

Mr Manifold noted that CRH had a “triple B” rating from multinational agencies that assess companies’ abilities to repay their debts, implying that there is a low-risk of the Irish group defaulting on its liabilities.

“On the back of our strategic initiatives, CRH has delivered significant profit growth in the first half of 2019, with a good performance in our heritage business and strong contributions from recent acquisitions,” Mr Manifold said in a statement.

“With our continued strong cash generation and financial discipline, we expect year-end debt metrics to be below normalised levels,” Mr Manifold said. “We anticipate further progress in the second half of the year with benefits from positive underlying momentum in all divisions as well as good contributions from acquisitions.”