Construction products firm CRH (CRH) may be seeing a significant dislocation in its market from the coronavirus crisis but it is still confident enough to go ahead with its full year dividend.
The news lifts the shares 5.7% to £22.70 - with the move set to be put to a shareholder vote at tomorrow’s AGM. A buyback programme has separately been put on hold.
While construction activity in some markets has paused almost entirely that is not the case everywhere, and as a globally diversified operator, CRH is still generating revenue.
In most North American markets construction has been classed as an ‘essential activity’ and in some areas restrictions which have been introduced are starting to be eased. First quarter like-for-like materials sales were actually up 8%, although this only includes a two weeks or so of lockdown conditions.
In Western Europe the situation is more acute but in the impact in Central and Eastern Europe has been substantially less significant and like-for-like materials sales were flat across the continent as a whole.
Building product sales were up 3% worldwide on a like-for-like basis, although began to come under more pressure towards the end of the quarter.
The company also has some $6bn of cash and cash equivalents at its disposal, enough to meet all debt obligations for the next four-and-a-half years.
It has cut pay for top executives, furloughed staff in affected areas, cut costs, consolidated operating locations and suspended non-essential spending.
Although specific short-term guidance has understandably been withdrawn, the outlook points to a potential benefit from stimulus measures in the future as governments look to get their economies moving after a period of coronavirus-inspired stasis.
