skip to main content

CRH's half year after tax profits rise by 26%

CRH is the largest building materials supplier in the US and generated about 75% of its core earnings there last year
CRH is the largest building materials supplier in the US and generated about 75% of its core earnings there last year

CRH, the largest building materials producer in the US and Europe, said today it expects full-year core profit to increase by a larger than expected 11% due to higher prices and robust demand for infrastructure and non-residential projects.

The Dublin-based group makes about 75% of its profits in the US.

It said it expects full-year earnings before interest, tax, depreciation and amortisation (EBITDA) of $6.2 billion compared to the $5.9 billion expected by analysts polled by Refinitiv.

CRH reported a 14% increase in first half EBITDA to $2.5 billion today, with profits up in all its divisions apart from Europe Building Solutions, which was down 15% year-on-year due to extended poor weather and new build residential weakness.

CRH said its half year revenues rose by 8% to $16.1 billion, while its after tax profits jumped by 26% to $1.2 billion.

The company said its earnings per share rose by 31% to $1.58.

It said that consistent with its dividend policy and strong financial position, the Board has decided to increase the interim dividend to $0.25 per share, an increase of 4% on 2022.

"Even though we are missing more than one-third of our business through residential, the other two thirds are very strong and I think it attests now to the strength of the business model that we have and the position of our markets," CEO Albert Manifold said.

Mr Manifold said US government infrastructure stimulus would lead to a protracted period of growth there for the next five to seven years.

He added that the so-called "reshoring" of critical supply chain manufacturing back to the US and Europe would continue to boost non-residential projects over the same period.

That meant the group's record profitability "looks good to continue into 2024," he said.

CRH's EBITDA margin also increased by 90 basis points to 15.6% in the first half after the company implemented mid-single to double-digit percentage price increases across the US and parts of Europe.

Albert Manifold said he expected further mid to high single digit price hikes in the US in the second half of the year.

CRH CEO Albert Manifold

He added that it would take at least a year or two - or as much four in the case of Europe - to recover all the unprecedented cost increases incurred during 2022.

Breaking down its divisions, CRH said sales at its America Materials Solutions rose by 9%, mainly driven by solid price progression across all lines of business. EBITDA was 13% ahead, as good commercial management offset the impact of higher input costs and lower volumes resulting from unfavourable weather in certain regions.

Sales at its Americas Building Solutions sales were 21% ahead of 2022, as strong contributions from acquisitions made the previous year and good commercial progress offset the impact of unfavourable weather on first-half activity levels. EBITDA was 25% ahead as a result of continued progress on pricing, cost control and production efficiencies, it added.

Sales at its Europe Materials Solutions sales were in line with last year on the back of continued strong pricing progress which offset the impact of lower activity levels.

CRH said that EBITDA was 13% ahead, supported by good commercial discipline across all markets which, together with a continued focus on cost savings, more than offset cost inflation.

But sales at its Europe Building Solutions fell by 4% on the same time last year due to longer winter weather conditions and softer residential demand. EBITDA was 15% behind 2022, it added.

CRH's chief executive Albert Manifold said today's strong results reflected the continued delivery of the company's differentiated strategy, further commercial progress across its businesses and good contributions from acquisitions.

"The strength of our balance sheet together with our relentless focus on disciplined capital allocation will enable us to invest in future growth and value creation opportunities for our business," he added.

CRH shareholders in June approved a plan to move the building materials company's primary stock market listing to New York from London, with Mr Manifold predicting "significant benefits" from the switch.

More than 95% of shareholders at an extraordinary general meeting in Dublin backed the move by the company.

The company switched its primary listing to London from Dublin more than a decade ago and will now de-list from Dublin completely.

Looking ahead to the rest of 2023, CRH said its operations in North America are expected to be supported by robust infrastructure demand.

It said this will be underpinned by significant increases in US federal and state funding, as well as good activity in key non-residential segments, supported by government funding initiatives in clean energy and onshoring of critical manufacturing.

"Although residential construction activity is expected to remain subdued across many of our markets in the current interest rate environment, the underlying fundamentals are attractive and supportive of robust long-term growth," the company said.

"Our businesses in Europe are expected to benefit from solid infrastructure demand, good non-residential activity and positive pricing momentum, while the residential market is
expected to remain challenging," it added.

CRH said that assuming normal weather patterns for the remainder of the year and without any "major dislocations in the macroeconomic environment", it expects full-year Group EBITDA of about $6.2 billion, up from $5.6 billion in 2022.

Shares in CRH were lower in Dublin trade today.