- First half sales up 14% year-on-year
- Strong pricing offsets cost inflation
- Margins maintained or expanded across all divisions
Building materials giant CRH (CRH) was the FTSE 100’s best performer, its shares rising 2.8% to £32.19, after the group reported a jump in first half earnings driven by ‘positive underlying demand and commercial progress’ in both North America and Europe.
Price increases from the Dublin-headquartered firm drove sales and earnings higher and CRH expects full year earnings before interest, tax, depreciation and amortisation (EBITDA) to rise by 10% to around $5.5 billion despite a ‘challenging cost environment’.
MARGIN STRENGTH
Group sales grew 14% to $15 billion in the half to June 2022 and were 12% ahead on a like-for-like basis, while EBITDA of $2.2 billion was 21% ahead of 2021 reflecting CRH’s ‘strong focus on commercial and operational initiatives’ which ‘more than offset the impact of cost inflation’.
On a like-for-like basis EBITDA was 13% ahead and CRH boasted that its margins were maintained or expanded across all divisions.
CEO Albert Manifold commented: ‘CRH has delivered another strong performance with further growth in sales, EBITDA and margin despite a challenging and volatile cost environment.
‘This performance reflects the continued execution of our integrated and sustainable solutions strategy. Looking ahead, despite some continued cost headwinds, the strength of our balance sheet and resilience of our business leaves us well positioned to deliver superior value for all our stakeholders.’
CASH MACHINE
Cash generative CRH, which completed the most recent tranche of its ongoing share buyback programme in June, increased the interim dividend by 4% to 24 cents per share and has invested $2.8 billion in acquisitions year-to-date.
These include July’s takeover of Barrette, North America’s leading residential fencing and railing solutions provider, for an enterprise value of $1.9 billion.
‘Our acquisition pipeline remains strong and our significant balance sheet capacity provides flexibility to capitalise on these opportunities to deliver further value for our shareholders,’ said the company.
Confident CRH is guiding towards full year EBITDA in the region of $5.5 billion, up from 2021’s $5 billion haul.
AJ Bell investment director Russ Mould commented: ‘Building materials firm CRH demonstrated its pricing power as first half earnings were up an impressive 13%, driven by double-digit price increases. The company’s exposure to big infrastructure projects provides it with some insulation against any economic downturn.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Tom Sieber) own shares in AJ Bell.
