CRH plc, the global building materials group, issues the following Trading Update for the period 1 January 2018 to 30 September 2018.
CRH plc, the global building materials group, issues the following Trading Update for the period 1 January 2018 to 30 September 2018.
Cumulative nine-month sales to the end of September amounted to €19.9 billion, an increase of 6% compared with the corresponding period in 2017. On a like-for-like basis, sales were 3% higher than 2017.
Sales (like-for-like) change versus 2017 | Europe | Americas | Asia | Group |
First half (H1) | +1% | +3% | -2% | +2% |
Quarter 3 (Q3) | +2% | +5% | +13% | +4% |
Nine months to September (9M) | +1%2 | +4% | +3% | +3% |
EBITDA for the nine months to the end of September 2018 was €2.5 billion, an increase of 8% compared with 2017 (€2.3 billion), reflecting a like-for-like increase of 2%.
EBITDA (like-for-like) change versus 2017 | Europe | Americas | Asia | Group |
First half (H1) | +1% | +3% | -59% | +1% |
Quarter 3 (Q3) | +2% | +3% | 0% | +3% |
Nine months to September (9M) | +2% | +3% | -44% | +2% |
On the back of solid underlying market activity, cumulative nine-month like-for-like sales2 were 1% ahead and like-for-like EBITDA was 2% ahead of the same period last year. We expect similar momentum in the final quarter and full-year EBITDA for Europe to be 2% ahead on a like-for-like basis.
In Europe Heavyside, cumulative nine-month like-for-like sales were 4% ahead of 2017 while cumulative like-for-like EBITDA was 2% ahead, reflecting improvements in overall prices and the benefit of performance improvement initiatives, partly offset by input cost increases.
Key Markets in Brief
Europe Lightside like-for-like nine-month sales were 5% ahead of 2017 reflecting good demand in key markets in the Netherlands, Poland and Australia. Like-for-like EBITDA for the period was also up 5%, with a solid performance across most platforms despite increasing input costs.
Key Markets in Brief
In Europe Distribution, following the divestment of DIY Benelux in July 2018, nine-month like-for-like sales2 were 1% ahead excluding the change in treatment of certain direct sales. Like-for-like EBITDA was down 4%, impacted primarily by continued challenging market conditions in Switzerland.
Key Markets in Brief
Against a backdrop of solid demand and the continuation of favourable market fundamentals, like-for-like nine-month sales in our Americas operations were up 4% compared with 2017, while EBITDA for the period improved by 3% against a backdrop of increasing input costs. We expect full-year like-for-like EBITDA to be 3% ahead of 2017.
Key Markets in Brief
In Americas Materials, volumes in Q3 were impacted by significant rainfall in the period. Good price increases across all products resulted in like-for-like nine-month sales 5% ahead. Over the same period, like-for-like EBITDA was 2% ahead of last year, as the price increases only partly compensated for increased input costs and weather disruption.
Key Products in Brief
Americas Products, with favourable market conditions in all major end-use segments, experienced sales growth in the third quarter driven by price increases as volumes were impacted by a competitive market and unfavourable weather. Like-for-like sales for the first nine months of 2018 were 2% ahead of last year and like-for-like EBITDA was 6% ahead of 2017, reflecting improved pricing and continued focus on commercial and operational initiatives.
Like-for-like sales for the first nine months of 2018 in the Philippines were 3% ahead of prior year, driven by improved volumes and prices on the back of stronger demand. Volumes in the third quarter were strong following a slow start to the year in our key regions in the Philippines, with cumulative cement volumes 2% ahead. Cumulative like-for-like EBITDA for the Division was 44% behind as pricing improvements were offset by higher fuel and power costs; this trend is expected to continue for the remainder of the year.
Key Markets in Brief
We expect full-year depreciation and amortisation expense (before impairment charges) to be broadly in line with last year (2017 reported: €1.1 billion).
The profit after tax on the divestment of our Americas Distribution business in January 2018 amounted to €1.1 billion and is included in profit after tax from discontinued operations. The net gain/loss on business and non-current asset disposals in 2018, which is dependent on the timing of divestment transactions still to be completed, is unlikely to be material (2017 reported: €56 million).
The Group's share of profits from equity accounted entities is expected to be broadly similar to last year (2017 reported: €65 million).
Net finance costs are expected to increase from last year (2017 reported: €349 million) as a result of higher average debt levels in the period compared with 2017 due to recent acquisitions, partly offset by the non-recurrence in 2018 of a one-off charge of €19 million relating to the early redemption of a portion of US dollar bonds in 2017.
Taking each of these elements into account together with our EBITDA outlook, we expect full-year profit before tax from continuing operations to be ahead of 2017 (2017 reported: €1.9 billion).
Demonstrating CRH’s commitment to active portfolio management as part of our strategy to deliver improved margins and returns, the Group has spent c. €3.5 billion on 38 acquisition/investment transactions to date in 2018 (including deferred and contingent consideration in respect of prior year acquisitions). On the divestment front, the Group completed the divestment of our Americas Distribution business in January 2018 and combined with 14 other transactions, realised business and asset disposal proceeds of €3.0 billion.
2018 Acquisitions and Investments
The largest acquisition to date in 2018, was Ash Grove Cement Company, which was acquired in June 2018 for c. €2.9 billion. This acquisition gives CRH a market leadership position in the North American cement market, allowing for greater vertical integration with our existing aggregates, asphalt and readymixed concrete businesses. Our Americas Materials Division completed a further 20 bolt-on acquisitions and one investment for consideration of c. €340 million. The Americas Products Division completed five acquisitions at a cost of c. €145 million.
In Europe, c. €140 million has been spent on 11 transactions; six acquisitions and one investment in Europe Heavyside, two acquisitions in Europe Lightside and two acquisitions in Europe Distribution.
2018 Divestments and Disposals
The majority of divestment proceeds relate to the divestment of our Americas Distribution business in January 2018 for a final agreed consideration of c. €2.4 billion. In July, the Group also completed the divestment of our DIY business in the Netherlands and Belgium, together with certain related property assets, for total consideration of c. €0.5 billion. Our strategic review of the European Distribution business is ongoing.
On 25 April 2018, the Group announced its intention to repurchase ordinary shares of up to €1 billion over the forthcoming 12 months. Between 2 May and 31 July 2018, 11.35 million ordinary shares were repurchased on the London Stock Exchange at an average discount of 0.5% to the volume-weighted average price over the period. Between 29 August and 18 October 2018, a further 12.45 million ordinary shares were repurchased on the London Stock Exchange and Euronext Dublin at an average discount of 1.3% to the volume-weighted average price over the period. This brings total cash returned to shareholders under our ongoing €1 billion share buyback programme to approximately €700 million. The Group remains committed to the programme and today announced the next phase.
1Like-for-like movements exclude the impact of currency exchange, acquisitions, divestments and certain one-off items
2Reported year-to-date 2018 sales were impacted by the change in treatment of certain direct sales at General Builders Merchants to an agency (net commission) basis following the adoption of the new revenue accounting standard, IFRS 15. Excluding the adjustment, like-for-like sales for Europe were +3% and for Europe Distribution were +1% ahead of 2017, while for Europe Distribution, including the adjustment sales were 4% behind 2017.
CRH will report its Preliminary Results for full-year 2018 on Thursday, 28 February 2019.
CRH plc will host an analysts’ conference call and webcast presentation at 08:30 GMT on Tuesday, 20 November 2018 to discuss the Trading Update. To join this call please dial: +353 (0)1 2460271, user PIN *0 (further international numbers are available here). A recording of the conference call will be available on the Results and Presentations page of the CRH website.
Contact CRH at Dublin 01 404 1000 (+353 1 404 1000) | |
Albert Manifold | Chief Executive |
Senan Murphy | Finance Director |
Frank Heisterkamp | Head of Investor Relations |