CRH plc, the global building materials group, issues the following Trading Update for the period 1 January 2020 to 31 March 2020 in advance of its Annual General Meeting (AGM) which takes place tomorrow in Dublin.
CRH plc, the global building materials group, issues the following Trading Update for the period 1 January 2020 to 31 March 2020 in advance of its Annual General Meeting (AGM) which takes place tomorrow in Dublin.
Albert Manifold, Chief Executive, said today:
“We have had a good start to the year, and although the global spread of COVID-19 brings challenges for us all, I have no doubt that with the financial strength of CRH and the experience of our leadership teams, we will endure through these unprecedented and uncertain times. All necessary actions are being taken to protect our employees and businesses, and to ensure that we are well positioned for the recovery in our markets.”
The safety of our people is our number one priority and our approach to workplace safety is uncompromising. In this regard, every effort is being made to ensure that we provide a safe working environment for our employees, contractors and customers, enabling them to carry out their activities in accordance with the various health and safety protocols currently in place across our markets.
Across the Group, our businesses are deeply embedded in our local communities. In an effort to help our communities with the ongoing COVID-19 crisis, several of our businesses are donating personal protective equipment (PPE) and other essential supplies to help local hospitals and communities deal with the current medical emergency.
The current health emergency caused by the global spread of COVID-19 has significant implications for the economies and construction markets in which we operate, and we are following the advice and direction of the World Health Organization (WHO) as well as government and public health authorities across our markets.
CRH continues to actively monitor the rapidly evolving situation and an extensive range of business continuity measures are in place across our operations globally. These measures include enhanced safety and sanitation protocols as well as adjustments to work practices to ensure social distancing is observed.
In an effort to slow the spread of the virus, governments around the world have implemented various restrictions on public gatherings, the movement of people and certain business activities. The impact of these measures on our operations has been visible since the middle of March, however the severity and the operational impact of the restrictions varies significantly from country to country.
In North America, while emergency restrictions have been implemented in all US states, construction has to-date been deemed an ‘essential activity’ in most markets and is permitted to continue, provided appropriate safety measures are implemented. Our businesses in Pennsylvania, New York City and Washington state have been the most impacted to-date, while our operations in the Southeast, Central and Western US have been less affected. We have also experienced significantly lower activity levels in Ontario and Quebec as a result of government restrictions on construction in both markets. Nevertheless, healthy backlogs and a favourable bidding environment continue to provide support for our business, and although the situation remains fluid, we are starting to see early indications of restrictions being eased across a number of markets.
Our operations in Europe have been more impacted to-date, with nationwide shutdowns being implemented across a number of Western European markets, including the UK, France and Ireland. With the exception of certain essential activities which are permitted to continue, our operations in these markets have been significantly impacted in recent weeks. In the absence of nationwide restrictions on construction activity, our Central and Eastern European businesses have been less impacted to-date.
In the Philippines, government restrictions implemented during the month of March have resulted in significantly lower volumes and activity levels in recent weeks.
Notwithstanding the evolving situation with regard to the global spread of COVID-19, the Group had a positive start to the year with first quarter like-for-like1 sales 3% ahead of 2019.
Americas Materials
First quarter like-for-like sales for our Americas Materials operations were 8% ahead of 2019, benefiting from good underlying demand and pricing improvements in all products. Sales volumes benefited from milder weather in our North and West regions, while wet weather impacted activity levels in the South.
Europe Materials
A solid start to the year for Europe Materials was offset by the impact of COVID-19 related government restrictions across a number of key markets in Europe and Asia during the last two weeks of March. As a result, sales in the first quarter were broadly in line with the same period in 2019.
Building Products
A mild start to the year along with solid demand in North America resulted in like-for-like sales 3% ahead of 2019. Favourable volumes together with pricing progress across most platforms was partly offset by the impact of government implemented COVID-19 restrictions on a number of our operations in Europe and North America towards the end of the quarter.
In this time of unprecedented economic, financial and operational uncertainty, management attention is firmly focused on protecting our business, mitigating any potential adverse financial impact and ensuring the Group is well positioned for the recovery in our markets. CRH has a strong and experienced management team with a proven track record of successfully guiding the Group through several periods of uncertainty and business disruption over the last 25 years. Immediate and comprehensive actions are being implemented to mitigate the financial impact of this current crisis. To-date these actions include:
The Group’s balance sheet and liquidity positions remain very strong, with a net debt to EBITDA ratio of 1.7x at year-end 2019. Following a prudent and precautionary decision to draw down its €3.5 billion revolving credit facility, the Group now has cash and cash equivalents of over $6 billion. This is sufficient to meet all maturing debt obligations for the next 4.5 years and the weighted average maturity of the remaining debt is 10.4 years. There are no financial covenants associated with the Group’s debt obligations.
In March the Group completed the latest phase of its share buyback programme, returning a further €200 million of cash to shareholders. This brings total cash returned to shareholders under the Group’s share buyback programme to €1.8 billion since its commencement in May 2018. Share buyback decisions are based on an ongoing assessment of the capital needs of the business and general market conditions. In light of the recent market volatility, the Board has decided to postpone the Group’s share buyback programme until further notice. As announced on 28 February, the Board has proposed a final cash dividend of €0.63 per share for the consideration of shareholders at tomorrow’s AGM.
The global COVID-19 pandemic is expected to have a material impact on economic and construction activity across our markets in 2020. Due to the unprecedented level of volatility in our markets and the uncertainty surrounding the extent and duration of government restrictions that are currently being implemented, the impact on CRH’s profitability in 2020 cannot be reasonably estimated at this time. The Group continues to monitor the situation closely and further updates will be provided when visibility improves and we have greater clarity over the expected financial performance of the Group in 2020.
The longer-term prospects for CRH remain positive, benefiting from significant financial strength and resilience together with a portfolio of high-quality assets in attractive markets. We have also seen strong efforts from governments and central banks around the world to mitigate the economic effects of the current crisis, and the construction industry is expected to be among the key beneficiaries of any future stimulus measures.
CRH will report its interim results for the six months ending 30 June 2020 on Thursday, 20 August 2020.
1 Like-for-like movements exclude the impact of currency exchange, acquisitions and divestments
Disclaimer:
Further information, including cautionary statements in order to utilise the “Safe Harbor” provisions of the United States Private Securities Litigation Reform Act of 1995 with respect to forward-looking statements is set out in the full release linked below.
CRH plc will host an analysts’ conference call at 08:30 BST on Wednesday, 22 April 2020 to discuss the Trading Update. To join this call please dial: +353 (0) 1 553 0196, user PIN *0 (further international numbers are available here). A recording of the conference call will be available on the Results & Presentations page of the CRH website.
Contact CRH at Dublin 404 1000 (+353 1 404 1000) | |
Albert Manifold | Chief Executive |
Senan Murphy | Finance Director |
Frank Heisterkamp | Director of Capital Markets & ESG |
Tom Holmes | Head of Investor Relations |