Albert Manifold wasn't given time to find a desk when he turned up for his first day at CRH in its headquarters in Dublin in 1998.
“I arrived on a Monday morning and they asked for my passport,” Manifold (55), chief executive of the group for the past four years, recalls. “They came back to me on the Tuesday with a Ukrainian visa. By Wednesday I was in Kiev.”
Armed with a Russian language book (he didn’t realise at the time that the locals spoke Ukrainian), the young executive hired a man to drive him around for $10 a day before ultimately tracking down a concrete facility on the outskirts of the city owned by Kovalska Industrial-Construction Group.
After spending a few weeks on a plastic chair in the bitter November cold observing comings and goings at the plant, Manifold finally made contact with the main man, Oleksandr Pylypenko, and – with the words of his hardware store-owning father ringing in his ears about never leaving without an order – secured a job to supply 150 bags of cement. It had to be supplied by CRH's Polish business as it didn't have a Ukrainian cement factory at the time.
“Outside of the federal US government, he’s our single biggest customer in all of CRH today,” says Manifold, who now spends 90 per cent of his time on the road. “To this day I still go and see him and his wife one weekend a year with my wife. We’ve never had a contract with the man, and price negotiations are done with me that weekend every year.”
Balancing the long game and nimble deal-making have turned CRH, formed out of the 1970 merger of Cement Ltd and Roadstone Ltd, into the world's second largest building materials company.
While continuing to crank out about 1.5 million tonnes of stone from its landmark Belgard quarry on the outskirts of Tallaght, Ireland’s biggest publicly-quoted company employs 89,000 people across 32 countries and had sales last year of €27.6 billion – equating to almost 10 per cent of Ireland’s gross domestic product (GDP). It has about 1,700 workers in Ireland.
Relationships
Manifold, who speaks at a rapid-fire pace, likes to rattle out the maxim that “we turn big rocks into small rocks”. But with up to 28 business development teams scattered across the globe scouting for deals at any given time, he places far more weight on building relationships.
For example, Manifold makes it his business to go and see a Chinese executive that he met in 2002 when he was sent out to research that market – five years before CRH made an initial investment there – three or four times a year.
When Manifold, a qualified accountant, agreed last year to buy the fifth largest US cement group, Ash Grove, for $3.5 billion (€2.8bn), he called a now-retired former CRH business development official who had first tested the waters on a takeover with the Kansas-based group in 1979 to tell him the good news.
The deal, which is due to close imminently, along with the purchase in January of Florida's Suwannee American Cement, are expected to fuel further growth this year after CRH's earnings before interest, tax, depreciation and amortisation (Ebitda) hit a record €3.3 billion in 2017.
"Historically, two-thirds of our profit has come either directly or indirectly through the acquisitions process," says Manifold of the group, which started its international expansion in 1973 under the late Tom Roche snr by buying a Dutch builders' merchant. CRH ventured across the Atlantic five years' later to buy a concrete products company in Utah.
North America accounted for more than 60 per cent of group earnings last year, though Manifold is hopeful that Europe, which has lagged an economic rebound in the US by half a decade, is on the road to sustainable recovery.
Contraction
The extent of contraction in Europe can be seen in Roadstone’s backyard in Belgard. Limestone extraction at the site, which opened in 1972 and is currently more than 100m below ground, is currently running at half the volumes of the go-go days of more than a decade ago.
Meanwhile, Manifold says the recovering European business still has not seen the full benefit of the group's largest ever acquisition, sealed three years' ago, of €6.5 billion of assets spun out from European rivals Lafarge and Holcim as they sought to appease competition authorities to deliver on their own merger.
“The minute it was announced, I knew it was game on,” said Manifold, who immediately concluded that there were very few players that could gobble up the assets in one bite. “I did a quick pull-together of the senior development team and we worked on the deal probably for seven or eight months.”
Pitched in the final stages against two consortia led by private equity buyers, Manifold headed out to Paris in January 2015 with a spare shirt for what was supposed to be an overnight trip to catch up with his team working on the deal codenamed Project Cities. “I was there for 43 days and never came home. It was very important to stay close to where the Holcim and Lafarge boards were meeting and to stay close to the main action in Paris.”
Manifold’s prior experience in private equity – working for Dublin-based buyout firm Allen McGuire – gave him a competitive advantage as he knew how his rivals would value parts of the business. “I knew when to push and when to pull. It wasn’t just about valuation – it was about certainty.”
The deal, according to Manifold, was down to his predecessor Myles Lee’s careful management of the group’s balance sheet as more heavily-indebted peers faltered during the crisis. The group had been helped by an almost €1.3 billion share sale to existing stockholders in early 2009.
Any notion among investors that Lee’s inherent caution would be replaced by a roll-up merchant in Manifold was put paid to early in his tenure. Months into the job in 2014, CRH unveiled a major sales programme for underperforming businesses or assets that no longer had a future in the group.
Lieutenants across CRH’s business have learned not to get too comfortable under this boss. Initially targeting about €1.5 billion of disposals, the programme was accelerated as the Lafarge-Holcim deal was digested and the company spat out unwanted units. While the group has spent €13 billion on deals in the past five years, it has earned almost €5 billion from disposals.
“I’m employed and paid very well to deliver shareholder returns. This is not an employee benefit programme. You can’t have dead capital sitting there not making money for you – and that’s really an embedded part of our business now.”
Most recently, CRH sold its US distribution business Allied Building Products to Beacon Roofing Supply at the start of the year for $2.6 billion. The logic was simple, according to Manifold. CRH could not find any more deals to add further scale to the business and it was being offered a price of 16 times earnings. That compared to the price of 10 times earnings it was negotiating on purchasing the higher-margin Ash Grove. Ash Grove and Suwannee will push CRH’s business further into the fast-growing southern US states.
Hotel room
Manifold was in his hotel room in Virginia on US election night in November 2016, when initial reaction in Asia signalled that financial markets were set for turmoil after Donald Trump clinched the presidency.
However, CRH shares jumped 9.2 per cent the next morning as investors piled into hopes that the biggest materials company – and biggest road-builder – operating in the US would be a key beneficiary from Trump’s then-mooted $1 trillion infrastructure plan.
However, the much-hyped plan to build new roads, bridges, highways and motorways – which Trump clarified in February should amount to $200 billion of federal funding, supported by more than $1.5 trillion of private investment – is now on hold until after the country’s mid-term elections in seven months’ time.
Shares have subsequently dropped by more than one-fifth from all-time highs reached last May, which valued the group at that time at more than €29 billion, as investors have taken a more circumspect view of Trump’s plan and the value of the dollar dropped against the euro, denting group profits.
Manifold, in fairness, played down the prospect of any “Trump bump” to earnings, telling investors in February last year to look more at the US’s existing $300 million-plus Fast Act highway spending programme as well as additional infrastructure spending approved by voters across a number of states at the same time as the presidential election.
The weakness in the share price has prompted analysts at Deutsche Bank to speculate that CRH might want to look at a partial or full listing of the US business in New York to unlock value, as the group’s stock, mainly traded in London and Dublin, trades at a discount to US peers.
“In my 20 years in CRH we’ve certainly looked at it a number of times, but every time we’ve looked at it it’s never made sense,” said Manifold. “But we keep an open mind, and it’s something we keep under review with our advisers.”
Careful review
When asked if he may take advantage of a perceived undervaluation of the group’s stock and launch a share buyback programme, the CEO said: “Again it’s something we keep under careful review. We’ve done it in the past, and I suspect we’ll do it again at some stage.”
The highest-paid Iseq executive in 2016, when his remuneration hit €10 million, Manifold’s package fell to €8.66 million last year as the group’s first share price drop in five years dented shareholder returns.
CRH also encountered a degree of shareholder dissent two years ago when some 40 per cent of investors polled at an agm voted against a plan to increase Manifold’s maximum annual cash bonus and allocation under a share plan.
The chief executive, a native of Dublin’s Templeogue whose parents ran a hardware store in nearby Kimmage, has no doubt he’s worth it. “I’m very well paid for what I do if I deliver the results. If the shareholders get the benefit, I get the benefit,” he says, in what appears to be a well-rehearsed answer. “I work in a global business. It’s a challenging business, and it’s got demanding targets – and I’m remunerated based on performance.”
CRH was criticised by analysts for being more reticent than rivals in expanding across emerging markets before the global financial crisis a decade ago. But its inheritance of a business in the Philippines as part of the LafargeHolcim deal in 2015 serves as a cautionary tale about the volatility of developing regions.
The loss-making business there has been buffeted in recent times by a temporary decline in infrastructure spending, rising local competition, a flood of cheap cement imports and rising fuel costs. Still, Manifold has no intention of walking away from the Philippines’ second largest cement producer.
“It’s a cyclical industry. The thing is not to make any quick decisions at any point in the cycle. The fundamentals of that country are very good, and it has significant construction needs going forward.”
Next generation
Meanwhile, Manifold said it will most likely fall to the “next generation” who lead CRH to decide on whether to invest further in China and India, markets where it acquired initial stakes in local businesses about a decade ago.
A low-profile chief executive who lives in Co Wicklow, he doesn't often get recognised at home. "It happens about twice a year." However, he recalls being in Thurles, Co Tipperary, two years ago when a man came up to him and shook his hand.
The man recalled how he had lost his shirt during the financial crash, but was able to keep his head above water as a CRH shareholder. The company continued to pay a dividend, and the businessman was able to raise some additional cash by selling some stock. “And that’s who I work for. I don’t work for [investment firms like] BlackRock or Wellington. I work for him. That’s what keeps me going.”
CV
Name: Albert Manifold.
Job: Chief executive, CRH.
Age: 55.
Lives: South Co Wicklow.
Family: Married, three children.
Something we might expect: A follower of Leinster Rugby having played prop forward at Templeogue College in Dublin, Manifold keeps fit through gym work, cycling, running and walking.
Something that might surprise: He's an avid beekeeper stemming from his childhood years in Templeogue when he helped a local priest with his beehive.
