CRH is planning a further €350 million share buyback programme over the next four months and has also agreed to sell its European shutters and awnings business for €300 million.
The Irish building materials giant launched a €1 billion share buyback plan almost 12 months ago, its first in a decade, to take advantage of flexibility with its finances and the fact that the stock was trading at a discount to what the board believed to be its “intrinsic value”.
Group chief financial officer Senan Murphy said at the end of February, as the programme neared completion, that investors should look at stock repurchases as “an ongoing part of the way we think about capital allocation going forward”.
On a conference call on Wednesday to discuss its trading update, Mr Murphy told analysts that any decision on further share buybacks after the group reports first-half results in August was not dependent on the expected outcome of the European distribution review in the coming months, but on the group’s overall trading performance and cash generation.
CRH said the European shutters and awnings business would be bought by Stella Group, a leader in the French roller shutter market. The Dublin-based company, led by chief executive Albert Manifold, has also spent €200 million on 16 small bolt-on deals and investments so far this year.
It said a strategic review of its European distribution business was “ongoing as we consider all options to maximise shareholder value”. Earlier this month, Reuters reported that CRH had hired Bank of America to start the sale of the business, which has an enterprise value of about €2 billion, including debt.
Like-for-like sales
CRH said its group like-for-like sales rose by 7 per cent in the first three months of the year, benefiting from mild weather conditions and good momentum across its main markets in Europe and North America.
It expects earnings before interest, tax, depreciation and amortisation (ebitda) for the seasonally less significant first half of the year to rise to more than €1.5 billion from €1.13 billion a year earlier, boosted by the integration of Ash Grove Cement in the US, which it accrued last year for $3.5 billion.
CRH expects its like-for-like ebitda for the second half to beat the €2.24 billion result for the same period of last year.
“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,” it said.
“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.”
CRH will host its annual general meeting in Dublin on Thursday.
