CRH plc was formed through a merger in 1970 of two leading Irish
public companies, Cement Limited (established in 1936) and
Roadstone Limited (1949). The newly formed group was the sole
producer of cement and the principal producer of aggregates,
concrete products and asphalt in Ireland. In 1970 CRH had sales of
c. €26m, 95% in Ireland.
Since that time, CRH’s strategic vision has been to become
an international leader in building materials, delivering superior
and sustained shareholder returns, while reducing its dependence on
individual markets and achieving a balance in its geographic
presence and portfolio of products.
Highlights of CRH’s consistent track record over the years
are:
The 1970s – Foundations of a Group
Irish Cement, Ireland
Following its foundation in 1970 CRH broadened its horizons in 1973
with its first acquisition on Mainland Europe, Van Neerbos, a Dutch
based builders merchant with some concrete products operations.
1978 saw the first move into the United States with the acquisition
of Amcor, a concrete products company based in Utah and the
acquisition of a Scottish-based builders merchant, Henderson. By
the end of the 1970s CRH had sales of €325 million and profit
before tax of €30 million.
The 1980s – Developing a clear strategy
Callanan Industries, USA
In the 1980s, CRH invested in its Irish operations by completing
major modernisations to its two cement works; the largest capital
project carried out by an Irish company up to that time. Relative
to its market capitalisation, this remains the largest single
development project carried out by CRH. The foundation of the now
Americas Materials Division commenced in 1985 with the acquisition
of Callanan Industries, an aggregates and asphalt company in
Upstate New York. CRH’s presence in mainland Europe grew in
1987 with the acquisition of the Beton Catalan Group, a major
producer of aggregates, concrete products and readymixed concrete
in Spain. In 1988, the growing merchanting operations in the UK
were rebranded as Keyline Builders Merchants with 60 branches. By
the end of the 1980s, CRH was a €1.3 billion sales group with
operations in 7 countries.
The 1990s – Strategy in action
HGP Curved Glass, USA
In 1990, development activity was principally in the US, where the
main step was the investment in 13 glass fabrication plants, the
basis for the highly successful Oldcastle Glass product group that
exists today. CRH then operated in 33 US states. Other bolt-on
deals were done in the UK, the Netherlands and Germany.
In 1991, a severe recession hit the US and UK in particular,
giving the most difficult trading conditions yet experienced by the
group in these markets. These difficult market conditions continued
into 1992. The emerging balance of operations minimised the setback
to results and CRH outperformed many industry peers that were not
so broadly based. Investment expenditure was judiciously focused in
pursuit of lowest cost production and market leadership in targeted
areas. Market uncertainty continued in 1993, but CRH had an active
year with EPS up 27% and development activity increasing supported
by a 1:5 rights issue. The Americas Materials Division expanded its
operations in the Northeast and entered the Mid-Atlantic
region.
1994 saw further progress in terms of acquisitions and organic
growth. In total CRH spent €200 million on acquisitions. In
the US, 12 deals valued at €120 million were completed across
all the major divisions of Precast, Architectural Products,
Materials and Glass, continuing the policy of becoming a
significant national player with leading market positions in the
regions of operation. In Europe, the concrete flooring and
architectural paving businesses in the Benelux were expanded, and
capital investments in Ireland and the UK further strengthened the
businesses in these markets. In 1995, acquisitions and major
capital projects of €275 million included new regional
platforms:
-
Stake Paving and Construction Co., USA
- The first investment in cement manufacturing
outside of Ireland through a shareholding in Cementownia
Ozarów, one of the leading Polish cement
producers.
- A minority stake in a major ceramic tile
manufacturer in Argentina.
- CRH’s first position in Canada with an
investment by the Glass Group.
- A new growth area for the Americas Materials
Division with the acquisition of Staker, a major quarry and
blacktop business in Utah and the mountain states.
The pace of investment increased from 1996. The purchase of Tilcon
for $300 million was CRH’s largest acquisition at that time,
establishing a unique regional position in materials in the
Northeastern US. With the addition of the Parson companies the new
US mountain states operations grew to be a $200 million sales
group. The acquisition of Allied Building Products gave CRH a fifth
core business in the US and a first presence in distribution. With
other investments in the UK, the Netherlands and France total
development spend reached a record €675 million. 1997 saw
further growth in Americas Materials and the new US Distribution
group was expanded.
Ozarow Cement Plant, Poland
In 1998, the total development spend on major projects and
acquisitions, including an initial 50.7% stake in the Ibstock clay
brick business, was a high of €691 million with a good balance
between Europe, North America and developing regions. Capacity
additions in Ireland were made to service the rapidly growing Irish
residential, commercial and infrastructure markets. At Roadstone
Dublin’s Belgard Quarry complex, one of the largest automated
block plants in the world was opened, with annual capacity of 30
million units. In Poland, a further 600,000 tonnes capacity was
added to the Ozarów plant, giving the group 3.6 million
tonnes of cement capacity there. CRH's major position in materials
in the Northeast and mountain states of the US continued to expand
with a further eight bolt-on acquisitions, the largest being the
€54 million Segale acquisition in Seattle.
1998 also saw the reorganisation of CRH's European divisions
into Europe Materials and Europe Products & Distribution, to
bring more focus to business development and a sharing of best
practice. The new Europe Products & Distribution division grew
rapidly in France, Belgium, the UK, Poland and Germany.
In 1999, CRH spent a total of €1.5 billion on business
expansion, a new record amount. This included the by now
“traditional” development spend on small to
medium-sized businesses, including investments in Chile in glass
tempering and in cement in the Ukraine together with a number of
major deals:
-
Ibstock Brick, UK
- A major strategic move was the completion of
the €550 million Ibstock acquisition, bringing market
leadership in the UK and Northeastern US facing brick
markets.
- Finnsementti and Lohja Rudus gave CRH a
leading market position in cement, aggregates and concrete products
in Finland, a first presence in the Baltic region and a
strengthened position in concrete and aggregates in
Poland.
- In the US the €425m acquisition of
Thompson-McCully in Michigan gave a strong initial presence in the
Midwest in aggregates, asphalt and paving. The acquisition of Dell
and Millington for €143m further consolidated CRH’s
position as a leading supplier of aggregates in the New York metro
area.
Following the acquisition of Ibstock, Keyline Builders Merchants
was disposed of in the UK. Keyline, had grown strongly since
CRH’s first step into the UK builders merchants’ market
in 1978, but had reached a crossroads regarding its future
development. While its performance had greatly improved, a path
towards market leadership at acquisition prices that would create
shareholder value was not apparent.
In the US, CRH’s product organisation with its regional
sub-structure had evolved throughout the 1990s. By 1999, the
Americas represented over half of group sales. With this
region’s rapid growth it became appropriate to reorganise the
Americas into two major divisions Americas Materials and Americas
Products & Distribution (encompassing the four product groups -
Architectural Products, Precast, Glass and Distribution).
By the end of the 1990s, CRH was a group with sales of €6.7
billion, and profits before tax at a new record high level of
€571 million. By this time, a defining feature of the group
was its approach to development, with activity devolved to regional
level, with development teams supporting senior local and regional
management in seeking businesses that could be readily assimilated
into CRH’s strong regional organisation.
The 2000s – The growth continues
In 2000, despite significant challenges in the operating
environment, CRH’s unique regional and sectoral balance again
underpinned significant growth in sales and profits and with a
record development spend of €1.6 billion, it was a year of
considerable progress. In addition to many small and medium-sized
deals across the major regions and product groups, there were a
number of significant acquisitions:
-
The Shelly Company, Ohio
- The €348 million acquisition of The
Shelly Company, together with a number of subsequent add-on smaller
deals, greatly advanced the position of the US Materials Group in
the Midwest.
- Towards the end of the year, CRH returned to
the home of its initial venture in 1985 with Callanan Industries by
the acquisition of the Dolomite Group in upstate New
York.
- In Mainland Europe, our Products &
Distribution Division built on the success of our existing daylight
and ventilation businesses through the €77 million acquisition
of the rooflight division of Yule Catto, with operations in the UK,
Belgium, Germany and Holland.
- Towards year-end, our Europe Materials team
acquired the Jura Group in Switzerland for €268 million, a
further step in expanding CRH’s cement and aggregates
presence in Europe, also with a distribution business with scope to
add value with the support of CRH’s existing European
distribution group.
In 2001 and 2002, CRH experienced challenging economic conditions
across most markets but continued to make good progress on many
fronts. Development activity remained steady with over €2
billion spent on 95 deals, the most significant being the purchase
in 2001 of Mount Hope Rock Products in New Jersey, further adding
to Americas Materials market position in the New York City area and
the acquisition in May 2002 of the Ehl Group, the market leader in
concrete paving and landscape walling products with a comprehensive
network of 32 modern production facilities in Germany and one in
Poland.
Secil Cement Plant, Portugal
Although market conditions continued difficult into 2003 and
2004 CRH continued to grow. In 2003, CRH completed its biggest deal
ever with the acquisition of Cementbouw, a leading Dutch building
materials group with DIY, merchanting and building products
operations and a 45% joint venture stake in Cementbouw’s
cement trading and readymixed concrete operations. Total
development spend in 2003 amounted to €1.6 billion on 42
deals. The highlight of 2004 was the 49% joint venture stake, with
joint management control, of Secil, a major Portuguese manufacturer
of cement and readymixed concrete, providing a new geographic
platform with development opportunities in Portugal and the
Mediterranean basin. By the end of 2004 CRH had sales of €12
billion and profit before tax exceeded €1 billion for the
first time. Performance and growth continued through 2005 and CRH
generated operating profit of €1.4 billion on sales of
€14.5 billion and reported profit before tax of €1.3
billion. Development activity amounted to approximately €1.45
billion. Development momentum in 2006 was very strong and net
acquisition spend for the year amounted to a record €2.1
billion. A total of 69 acquisitions was concluded, this included
Ashland Paving And Construction for US$1.1 billion (net of
disposals), the largest single transaction completed by the Group;
MMI Products Inc for US$350 million; and Halfen-Deha Group (Halfen)
for €170 million. Following a record acquisition spend in
2006, CRH continued the momentum in 2007, spending €2.2
billion on 78 acquisitions which strengthen, expand, and add value
to our network. In addition a further €0.7 billion
3-year programme of investment in cement plant modernisation and
expansion was progressed. Major transactions in 2007 included: 50%
acquisition of Denizli Cement (Turkey), 100% acquisition of Harbin
Sanling Cement (China), Conrad Yelvington Distributors (US),
Gétaz Romang (Switzerland), Acoustical Materials Services
(US), Vistawall (US).
The vast majority of our 2007 acquisitions are value-enhancing
bolt-ons which continue to develop our cement and aggregate
platforms, expand existing strong market positions for our Products
operations and leverage our successful Distribution business
model.
The combination of our acquisition and greenfield investment
initiatives continues to underpin CRH's future performance and
growth.
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