CRH plc, the global building materials group, issues the following Trading Update for the period 1 January 2019 to 31 March 2019 in advance of its Annual General Meeting (AGM) which takes place on the 25th April at 11.00am in Dublin.
As previously announced, the Group was reorganised into three Divisions effective 1 January 2019: Americas Materials, Europe Materials and Building Products.
A positive start to the year with first quarter like-for-like* Group sales 7% ahead of the same period last year. Sales volumes benefited from mild weather conditions and good momentum across most of our major markets. Sales growth was also supported by pricing progress across all major product lines.
Our Ash Grove acquisition, completed in June 2018, traded in line with expectations with synergy delivery progressing as planned.
Year-to-date the Group spent c. €0.2 billion on 16 bolt-on acquisitions / investments.
The Group has reached agreement to divest of its European Shutters & Awnings business to StellaGroup for a total consideration in excess of €0.3 billion.
The strategic review of the Europe Distribution business is ongoing as we consider all options to maximise shareholder value.
With a continued focus on business improvement, our Group-wide profit improvement programme is advancing well in all business areas.
In light of our strong balance sheet and cash generation, the Board is proposing to continue our share buyback programme with a further tranche of up to €350 million to be completed before the Group’s interim results announcement in August.
Group EBITDA, for the seasonally less significant first half of the year, is expected to be in excess of €1.5 billion (H1 2018: €1.13 billion) reflecting a mid-single digit percentage increase on a like-for-like basis with a good contribution from acquisition activity. This also includes the benefit of currency exchange movements and the impact of IFRS 16 Leases.
With normal weather patterns and in the absence of any major market dislocations, like-for-like EBITDA in the second half of the year is also anticipated to be ahead of the second half of 2018.
*Like-for-like movements exclude the impact of currency exchange, acquisitions, divestments and the impact of IFRS 16 on lease accounting effective 1 January 2019
Europe Materials Update
Like-for-like sales were 12% ahead in the first quarter aided by continued positive trends in a number of key markets, good pricing momentum and milder weather conditions compared to the very unfavourable early-season weather experienced last year.
Key Markets in Brief
UK: Increased readymixed concrete, asphalt and cement volumes against significantly weather-impacted comparatives; favourable cement, asphalt and aggregates pricing
France: Good market demand resulted in higher volumes; prices ahead
Switzerland: Increased cement volumes; prices slightly ahead of 2018
Germany: Strong cement market demand; prices ahead in all products
Ireland: Volumes ahead with good demand; cement and readymixed concrete prices ahead
Finland: Cement volumes and prices slightly ahead of 2018
Poland: Cement volumes well ahead aided by good weather conditions; price increases across all products
South East Europe: Strong cement volumes, particularly in Romania; prices ahead
Philippines: Cement volumes strongly ahead of 2018 following the release of Government infrastructure funding; prices also ahead
Building Products had a very satisfactory start to the year with like-for-like sales for the first quarter 5% ahead of 2018. A positive demand and pricing backdrop in our main markets was supported by mild weather conditions.
First Half Outlook
Group EBITDA, for the seasonally less significant first half of the year, is expected to be in excess of €1.5 billion (H1 2018: €1.13 billion) reflecting a mid-single digit percentage increase on a like-for-like basis with a good contribution from acquisition activity. This also includes the benefit of currency exchange movements and the impact of IFRS 16 Leases. In Americas Materials, with a continued positive demand environment, like-for-like EBITDA is expected to be ahead of H1 2018. Like-for-like H1 EBITDA is also expected to be ahead in Europe Materials, despite challenges in the UK due to ongoing Brexit related uncertainty. With continued momentum, like-for-like EBITDA in Building Products is expected to show good improvement compared with the same period last year.
Second Half Outlook
We expect growth in Americas Materials in the second half of the year supported by continued advancement in both residential and non-residential construction markets in the US along with increased federal, state and local infrastructure funding measures. In Europe Materials, while the good start to the year with more favourable weather conditions is encouraging and we expect the second half performance to be ahead of last year, we anticipate that the strong rate of organic sales growth experienced in the first quarter is likely to moderate. In Building Products, we expect growth in the second half across all business segments in Europe and the US. Against this backdrop and while maintaining a relentless focus on progressing our profit improvement programme, we expect like-for-like EBITDA in the second half of 2019 to be ahead of the second half of 2018 (H2 2018: €2.24 billion).
CRH will report its interim results for the six months ending 30 June 2019 on Thursday, 22 August 2019.