CRH sees earnings growth despite energy costs and Ukraine war

CRH said on Wednesday it expected its sales and earnings margins to grow over the first half of 2022, despite significant energy cost volatility and the impact of the ongoing war in Ukraine.

The building materials giant also revealed in a trading update that its sales rose 15 per cent in the first half of this year, with each of its three divisions, Americas Materials, Europe Materials and Building Products, turning in strong performances.

“Overall, assuming normal seasonal weather patterns and absent any major dislocations in the macroeconomic environment, we expect group sales, ebitda and margin for the first half of the year to be ahead of 2021,” the company said. Ebitda refers to earnings before interest, tax, depreciation and amortisation.

CRH, led by chief executive Albert Manifold, said in early March that it had temporarily shut down its operations across its four locations in Ukraine, where it has 800 local employees, in the wake of the Russian invasion, and was concentrating on helping the families of staff to escape the conflict.

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The company said that activity levels in Ukraine had a “strong start” to the year, before Russia invaded the country in late February. Overall demand in eastern Europe was “robust” during the first quarter, particularly in Poland and Romania, underpinning 11 per cent sales growth in its wider Europe Materials unit.

The division’s sales in the UK and Ireland were “well ahead” of the same period in 2021, fuelled by higher underlying demand and milder weather conditions.

“Despite the challenges of significant energy cost volatility and the ongoing conflict in Ukraine, we expect like-for-like ebitda in our Europe Materials business to be ahead of the prior year period,” it said.

Sales in CRH’s Americas Materials operations were up 13 per cent, with the largest roadbuilder in North America’s asphalt volumes rising 19 per cent as acquisitions offset negative impact of weather and timing of projects in the market. Still, its aggregates volumes dipped 3 per cent, hit by adverse weather conditions in the northeast, Great Lakes and west divisions. Cement and paving and construction services business also grew during the period.

First-quarter sales jumped 22 per cent in the Building Products division. CRH said at the end of February that it had agreed to sell its North American glass building products unit, Oldcastle Building Envelope, in a deal worth $3.8 billion (€3.51 billion) to private-equity firm KPS Capital Partners. The deal is expected to close by the end of June.

CRH has spent $600 million on 11 acquisitions and completed $30 million of business and asset disposals so far this year.