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CRH announces further development initiatives of euro 359 million

14 January 2002

CRH plc, the international building materials group, announces a range of development initiatives totalling euro 359.2 million undertaken during the second half of 2001. These initiatives bring total development spend for 2001 to circa euro 1 billion.

Commenting on these developments, Liam O’Mahony, CRH Chief Executive, said:

"These initiatives combine a number of major capital investments to drive organic growth with the acquisition of 22 businesses that consolidate market presence, create synergies and establish strong footholds for future expansion."

The principal initiatives contained in this Development Strategy Update may be summarised as follows:

  • Materials - Europe: euro 38.6 million - eight bolt-on acquisitions for the Division’s readymixed concrete and aggregate activities in Finland and the purchase of a clay brick business in Northern Ireland, together with a major upgrade of Irish Cement’s crushing and blending facility at its Platin cement works near Dublin.
  • Products & Distribution - Europe: euro 88.5 million - entry into the insulation sector in the Nordic countries together with four acquisitions which expand the Division’s existing paving, merchanting and DIY operations in the Benelux. In addition, a major project to reorganise clay brick production capacity is underway in the United Kingdom.
  • Materials - The Americas: euro 51.6 million - four acquisitions in Ohio, Pennsylvania, Michigan and New York, together with an investment to expand liquid asphalt storage facilities in Michigan.
  • Products & Distribution - The Americas: euro 180.5 million - in conjunction with a number of major capital investments in the Precast Group and in Glen-Gery, the Division successfully completed four acquisitions in the Architectural Products, Glass and Distribution Groups.

CRH ANNOUNCES FURTHER DEVELOPMENT INITIATIVES OF EURO 359 MILLION

CRH plc, the international building materials group, announces a range of development initiatives totalling euro 359.2 million undertaken during the second half of 2001. These initiatives bring total development spend for 2001 to circa euro 1 billion.

Materials - Europe: euro 38.6 million

Finland

In line with the Division’s strategy to expand and consolidate its market presence in aggregates and readymixed concrete in Finland, Lohja Rudus completed a total of eight bolt-on acquisitions during the second half of 2001.

Betoni-Karja, JT-Betoni and Vanninen produce readymixed concrete in central and northeastern Finland. In the southeast, Veljekset Kaukasalo, a leading aggregate supplier and crushing contractor, and Teollisuusbetoni, a readymixed concrete and concrete products manufacturer, provide an excellent source of aggregate reserves and extend Lohja Rudus’ existing presence in the region. Sora Helminen, a producer of aggregates located close to Kuopio, expands the Division’s operations in the east of Finland. In the Greater Helsinki area, Lohja Rudus has acquired Pohjolan Sorajaloste, a supplier of wearing course aggregate, and VV–Pumppaus, a concrete pumping contractor. Combined annual sales from these eight acquisitions amount to approximately euro 17 million.

Northern Ireland

In September, the Materials - Europe Division acquired Tyrone Brick, the leading clay brick manufacturer in Northern Ireland. The company, which operates from one production facility at Dungannon, Co. Tyrone, has annual sales of euro 14 million.

Republic of Ireland

Irish Cement commenced a euro 7.5 million project in late-2001 to install a new shale crusher and blending plant at its Platin works north of Dublin. In addition to reducing shale haulage costs and facilitating the continued utilisation of pet coke as a kiln fuel, the plant, which will be commissioned in autumn 2002, will result in increased clinker production.

The total cost of the nine Materials - Europe acquisitions is euro 31.1 million, on which goodwill of euro 10.2 million arises.

Products & Distribution - Europe: euro 88.5 million

Concrete Products Group

In November, the Concrete Products Group acquired Zoontjens, the market leader in concrete roof pavers in the Netherlands with annual sales of euro 14 million. Zoontjens has a strong product line and represents a good opportunity for Struyk Verwo to expand its presence in niche segments with potential for production and marketing synergies.

Clay Products Group

In order to expand its market leadership in the UK and to meet increasing demand for soft mud bricks, Ibstock Brick has recently undertaken a euro 9.0 million project to restructure and rationalise production capacity at four of its facilities in Ellistown, Leicester, Atlas and Lodge Lane. The most significant component of the total expenditure relates to the conversion of the Ellistown facility (which was acquired in 1998) from wire-cut to soft mud technology.

Building Products Group

The Insulation Group, which already has manufacturing facilities in Germany, the Benelux, Poland, Great Britain and Ireland, entered the insulation market in the Nordic countries in December through the acquisition of ThermiSol, the leading expanded polystyrene (EPS) producer in the region with annual sales of euro 45 million. Operating from a total of seven well-located and efficient production facilities in Finland, Sweden and Denmark, ThermiSol provides an excellent base for further development capitalising on increasingly stringent insulation standards in all European markets.

Distribution Group

In July, the Distribution Group purchased Bos Bouwstoffen, a single-branch builders merchant located in Weert in the Netherlands with annual sales of euro 9 million. Following amalgamation with Van Neerbos’ existing branch in Weert, the acquisition is expected to result in purchasing synergies and overhead reductions.

The Distribution Group further expanded its network of DIY stores operating under the GAMMA/KARWEI franchise through the acquisition of Cox Bouwmarkten and GAMMA Aalst in September and October respectively. With six stores and annual sales of euro 27 million, the acquisition of Cox Bouwmarkten gives a strong leadership position in the province of Noord Brabant in the south of the Netherlands. The GAMMA Aalst store (with annual sales of euro 6 million) is located in the Brussels-Antwerp-Ghent triangle and represents the group’s first investment in the DIY market in Belgium where further development opportunities exist. CRH now operates a total of 59 DIY stores in the Benelux.

The total cost of the five Products & Distribution - Europe acquisitions is euro 79.5 million, on which goodwill of euro 50.4 million arises.

Materials - The Americas: euro 51.6 million

The Materials Division in North America continued its expansion drive during the second half of 2001 with the completion of a total of four deals yielding combined incremental annual sales of circa euro 38 million.

Central Group

In July, the Division entered into a liquid asphalt supply relationship with the Heritage Group and acquired a 50% stake in Heritage’s dolomitic limestone quarry near Toledo, Ohio. In addition to augmenting aggregate self-sufficiency in the Shelly Group, the deal provides access to the Heritage Group’s proprietary asphalt and bitumen know-how from which the Materials Group envisages leveraging substantial benefits.

In December, the Division acquired the aggregate assets of Pennsylvania Lime comprising a limestone quarry with 160 million tons of permitted high quality reserves near Harrisburg, Pennsylvania. With direct access to the principal east-west line of the Norfolk Southern railway, and three depots which serve as distribution outlets for stone in southern New Jersey and Delaware, the acquisition is an excellent fit with the Division’s existing aggregate, asphalt and readymixed concrete activities in the Mid-Atlantic region.

Also in December, Thompson-McCully purchased Thompson Asphalt Products, a small asphalt paving contractor located in Coldwater in southwestern Michigan. The acquisition enables increased utilisation of recycled asphalt paving and the achievement of savings in liquid asphalt costs and general overhead.

Thompson-McCully has also undertaken a project to construct a 30,000-ton liquid asphalt tank and associated equipment at its existing terminal facility in Michigan at a cost of euro 3.5 million. Through providing increased winter-fill storage capacity for bitumen, the investment enables the company to take further advantage of lower seasonal prices for this key material in asphalt production.

Northeast Group

Tilcon New York acquired the asphalt assets of County Asphalt in July. Based in West Nyack, New York, the acquisition extends and strengthens Tilcon’s market presence in the southwestern Hudson Valley and should lead to savings in liquid asphalt and overhead costs.

The total cost of the four acquisitions undertaken by Materials - The Americas amounts to euro 48.1 million, on which goodwill of euro 5.5 million arises.

Products & Distribution - The Americas: euro 180.5 million

Precast Group

The Precast Group commenced four capital projects during the second half of 2001 amounting to euro 20.6 million in total. The projects, which entail upgrading and expanding manufacturing facilities at South Bethlehem in New York, Hatfield in Pennsylvania and Ramsey in Minnesota together with the replacement of an ageing installation at Fuquay in North Carolina, will augment capacity and enable the realisation of production cost savings.

Architectural Products Group (APG)

In October, the Group acquired W.R. Bonsal, a leading manufacturer of packaged concrete and asphaltic products and tile installation compounds operating from seven technically advanced plants in six southeastern states. With annual sales of euro 93 million and strong market coverage in a region contiguous to existing APG markets, Bonsal is the second largest US producer of dry mixed bagged products under the Sakrete® brand and enjoys a substantial position in the homecenter sector. It is envisaged that significant synergies will materialise as Bonsal and American Stone Mix, which was acquired by APG in June 2000, rationalise their operations.

In December, Glen-Gery, APG’s clay brick business which has leading positions in the US Northeast and Midwest, acquired Global Clay Products, the sole producer of clay brick in Illinois with annual sales of circa euro 18 million. Located 75 miles southwest of Chicago, the acquisition will give Glen-Gery added low cost production capacity and will significantly reduce its transportation costs in servicing the large Illinois market.

Glen-Gery has also started construction and installation of a replacement tunnel kiln and robotic handling equipment at its Hanley facility in Pennsylvania at a total cost of euro 20.4 million. It is envisaged that the plant will be commissioned in January 2003. In addition to substantial cost savings in labour and fuel usage, the investment will facilitate enhanced customer service through reduced lead times and will enable Glen-Gery to take advantage of growth opportunities in the non-residential sector.

Glass Group

In July, the Glass Group purchased the fixed assets of S&S Glass Specialties, a glass fabrication facility located in Wauseon, Ohio with annual sales of euro 7 million. The plant operates as a satellite of the Glass Group’s Perrysburg operations and will assist in the strategic drive to establish an enhanced presence in the Midwest and Chicago markets.

Distribution Group

United Builders Supply, the largest distributor of commercial and residential wallboard and related products in New England, was acquired in August. United has three branches in Framingham and Weymouth, Massachusetts and Cranston, Rhode Island generating annual sales of circa euro 50 million. In addition to expanding Allied’s market coverage to encompass New England, the acquisition provides an excellent base for future development initiatives in both the interior products segment and in roofing and siding, the Group’s traditional market.

The total cost of the four acquisitions completed by Products & Distribution - The Americas amounts to euro 139.5 million including goodwill of euro 29.3 million.


Contact CRH at Dublin 404 1000 (+353 1 404 1000)

Liam O’Mahony Chief Executive
Harry Sheridan Finance Director
Myles Lee General Manager - Finance

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