CRH plc, the leading provider of building materials solutions, issues the following Earnings Update for the period 1 January 2023 to 30 September 2023.
CRH plc, the leading provider of building materials solutions, issues the following Earnings Update for the period 1 January 2023 to 30 September 2023.
| Nine months ended 30 September | 2023 | Change1 |
| Sales | $26.3bn | +8% |
| EBITDA | $4.8bn | +14% |
| EBITDA Margin | 18.1% | +100bps |
Albert Manifold, Chief Executive, said today:
‘‘I am pleased to report another strong performance for our business. Our integrated solutions strategy continues to deliver superior growth, while our strong cash generation and disciplined approach to capital allocation enables us to create additional value for our shareholders. Looking ahead to the remainder of the year, we are raising our guidance and expect to deliver full-year EBITDA of approximately $6.3 billion, representing another record year for CRH.”
Announced Tuesday, 21 November 2023
Group sales for the nine months ended 30 September 2023 amounted to $26.3 billion, an increase of 8% compared with the corresponding period in 2022, or 3% ahead on a like-for-like2 basis. The positive momentum experienced in the first half of the year continued into the third quarter, underpinned by strong commercial progress and positive underlying demand across key end-use markets.
Third quarter sales in Americas Materials Solutions were ahead of prior year, driven by strong pricing progress across all lines of business, which offset lower activity levels resulting from unfavourable weather in certain regions. Q3 sales in Americas Building Solutions were ahead of prior year, driven by increased pricing and contribution from acquisitions while like-for-like sales were in line with the prior year. Europe Materials Solutions delivered positive sales growth in Q3 driven by good commercial management and a currency tailwind which more than offset the impact of lower activity levels. Third quarter sales in Europe Building Solutions continued to be impacted by subdued new-build residential activity and like-for-like sales were behind prior year.
| Sales change versus 2022 | Americas Materials Solutions | Americas Building Solutions | Europe Materials Solutions | Europe Building Solutions | Group |
| First Half (H1) | +9% | +21% | - | -4% | +8% |
| Quarter 3 (Q3) | +5% | +4% | +17% | +10% | +8% |
| Nine months to September (9M) | +7% | +15% | +6% | +1% | +8% |
EBITDA for the cumulative nine-month period was $4.8 billion, 14% ahead of prior year, or 9% ahead on a like-for-like basis, reflecting continued delivery of our integrated solutions strategy, strong commercial management and operational efficiencies, driving further margin expansion.
| EBITDA change versus 2022 | Americas Materials Solutions | Americas Building Solutions | Europe Materials Solutions | Europe Building Solutions | Group |
| First Half (H1) | +13% | +25% | +13% | -15% | +14% |
| Quarter 3 (Q3) | +10% | +19% | +33% | -16% | +14% |
| Nine months to September (9M) | +11% | +23% | +20% | -16% | +14% |
Sustainability is deeply embedded in all aspects of our business. We continue to uniquely integrate our materials, products and services to offer more sustainable solutions for our customers and advance our progress in circularity. Dedicated teams across our business continue to make progress on our industry-leading target to deliver a 30% reduction in group-wide absolute carbon emissions by 2030. The Science Based Targets initiative (SBTi) has validated our 2030 decarbonization targets in line with a 1.5°C pathway, keeping us on the path to achieving our overall ambition of becoming a net-zero business by 2050.
Based on current trading conditions and the momentum that we see across our businesses, we are raising our guidance and expect to deliver full-year EBITDA of c.$6.3 billion (2022: $5.6 billion), full-year net cash inflow from operating activities of c.$5 billion (2022: $4.0 billion) and a year-end net debt to EBITDA ratio of c.1.1x (2022: 0.9x). Looking ahead to 2024 and notwithstanding some macroeconomic uncertainties, we expect resilient underlying demand across our key end-use markets in North America and Europe, underpinned by significant public investment in infrastructure and increased re-industrialization activity in key non-residential segments. While new-build residential construction is expected to remain subdued, we expect positive pricing momentum to continue, supported by good commercial management and the benefits of our integrated and value-based solutions strategy.
Americas Materials Solutions sales for the first nine months of the year were 7% ahead of 2022, or 6% ahead on a like-for-like basis, with strong commercial progress across all lines of business and robust construction sales partly offset by lower activity in certain regions impacted by unfavourable weather. Nine-month EBITDA was 11% ahead of prior year, or 10% ahead on a like-for-like basis, supported by good pricing across all markets and strong operational efficiencies offsetting continued cost pressures.
Aggregates volumes for the nine months were 2% behind 2022, impacted by unfavourable weather conditions in the West region. Demand in the Great Lakes and Northeast regions remained strong, benefiting from higher levels of infrastructure funding. Good commercial management led to a 14% increase in average prices, with increases in all regions. Strong price progression of 16% in our cement business delivered sales growth offsetting lower demand with volumes 5% behind prior year mainly due to adverse weather in the North Texas and West Inland regions. Overall Essential Materials sales for the nine months were 10% ahead of 2022.
Nine-month sales in our paving and construction services business were 5% ahead of 2022 with growth in most regions driven by improved pricing and good backlog execution. Asphalt volumes were broadly in line with prior year while average prices increased by 8%. Readymixed concrete volumes were 4% behind 2022, despite a strong performance in Great Lakes supported by improved demand. Volumes were impacted by unfavourable weather in the West and softer new-build residential demand in the South. Readymixed concrete prices increased by 13%. Overall Road Solutions sales were 6% ahead of prior year.
Nine-month sales in Americas Building Solutions were 15% ahead of 2022, or 1% ahead on a like-for-like basis, reflecting contributions from prior year acquisitions and good commercial progress. The positive momentum experienced in the first half of the year continued into Q3, with sales growth, production efficiencies and a continued focus on cost control resulting in EBITDA 23% ahead of prior year, or 9% ahead on a like-for-like basis.
Nine-month sales were 20% ahead of 2022, supported by good commercial progress, solid underlying demand and a strong contribution from the Barrette Outdoor Living acquisition. Like-for-like sales were 2% ahead of prior year.
Nine-month sales were 7% ahead of 2022 benefiting from strong commercial management, positive underlying demand in the water, telecommunications and energy utility markets and good contributions from recent acquisitions. Nine-month like-for-like sales were in line with 2022.
Sales in Europe Materials Solutions for the nine months were 6% ahead of the equivalent period in 2022, or 5% ahead on a like-for-like basis, reflecting continued pricing progress which more than offset the impact of lower activity levels due to subdued residential demand. Nine-month EBITDA was 20% ahead of 2022, or 17% ahead on a like-for-like basis, as a result of strong commercial management, operational excellence initiatives and cost saving actions which mitigated the impact of cost inflation.
Nine-month sales were 9% ahead of 2022, primarily driven by good commercial management across all markets. Activity levels were impacted by unfavourable weather earlier in the year in Central Europe and subdued new-build residential demand amid higher interest rates.
Despite the impact of adverse weather in the first half of the year and subdued market demand in the UK and Finland, strong pricing progress across all key markets resulted in total sales for the nine months 3% ahead of the same period in 2022.
Overall sales in Europe Building Solutions for the nine-month period were 1% ahead of prior year but 5% behind on a like-for-like basis, primarily due to subdued new-build residential activity. Infrastructure and non-residential demand was resilient, but slower residential markets resulted in EBITDA 16% behind prior year.
Like-for-like sales were in line with prior year as softening demand in key markets and the impact of unfavourable weather earlier in the year were offset by robust public sector order books in the Netherlands and Belgium.
Infrastructure Products experienced strong sales growth over the nine-month period due to good demand in both non-residential and infrastructure markets in our Australian businesses supported by strong commercial progress in Europe. Demand for Precast Products and Construction Accessories was impacted by slower new-build residential activity across most countries. Nine-month like-for-like sales in Building & Infrastructure Solutions were 7% behind 2022.
We expect full-year depreciation and amortisation to be slightly higher than prior year (2022: $1.7 billion) due to the impact of acquisitions.
The Group’s share of profits from equity accounted entities is expected to be in line with 2022, while profit from non-current asset disposals in 2023 is expected to be ahead of prior year.
Net finance costs are expected to be lower than prior year (2022: $376 million) primarily due to higher interest income.
Taking each of these items into account together with our EBITDA expectations, we expect full-year profit before tax to be well ahead of 2022 (2022: $3.5 billion).
Reflecting our year-to-date acquisition spend, increased capital expenditure and the Group's ongoing share buyback program, year-end net debt is expected to be c.$7.0 billion (2022: $5.1 billion). Considering our full-year EBITDA guidance and our continued strong cash generation, our year-end net debt to EBITDA ratio is expected to be c.1.1x (2022: 0.9x).
The Group completed the most recent tranche of its increased share buyback program in September, bringing total cash returned to shareholders under our ongoing share buyback program to c.$6 billion since its commencement in May 2018. As announced on 25 September 2023, the Group continued its share buyback program with a further tranche of $1 billion to be completed no later than 20 December 2023, reflecting our strong financial position and commitment to returning cash to shareholders. This $1 billion tranche is the third stage of the wider $3 billion program announced on 2 March 2023.
Consistent with our progressive dividend policy and strong financial position, the Board has decided to accelerate the payment of the 2023 dividend by distributing a second interim dividend of $1.08 per Ordinary Share. The second interim dividend payment will be in lieu of a final dividend, resulting in a full-year dividend per share of $1.33 for 2023 and representing a 5% increase compared to prior year. The dividend, which will be paid wholly in cash, will be paid on 17 January 2024 to shareholders registered at the close of business on 15 December 2023. The ex-dividend date will be 14 December 2023. Commencing in Q1 2024, the Group intends to transition to quarterly dividends with more equally distributed payments.
The Group completed sixteen acquisitions year-to-date for a total consideration of $0.7 billion, the largest of which was the acquisition by Americas Building Solutions of Hydro International, a leading provider of stormwater products, wastewater treatment products, wastewater services, and data solutions.
As announced on 21 November 2023, the Group has reached an agreement to acquire an attractive portfolio of cement and readymixed concrete assets in Texas, USA (the “Assets”) for a total consideration of $2.1bn. The combined portfolio of assets is expected to generate proforma 2023 EBITDA of approximately $170 million. The Assets comprise a 2.1mt capacity cement plant located between San Antonio and Austin, a network of terminals along the eastern gulf coast of Texas and a portfolio of 20 readymixed concrete plants with annual shipments of c.1.6m cubic yards serving the Austin and San Antonio markets. The proposed transaction is subject to regulatory approval and is expected to complete in H1 2024.
The acquisition of high-quality materials assets in Texas further strengthens our market leading position in the state and increases our exposure to attractive, high-growth markets. Our ability to leverage our cement expertise and technical capabilities will enable us to enhance and optimize our existing footprint in Texas, resulting in significant synergies and self-supply opportunities. We also believe there is significant potential to unlock additional growth opportunities across an expanded footprint in this attractive growth market.
During the first nine months of 2023, the Group realised proceeds of $64 million from the disposal of surplus property, plant and equipment and other non-current assets. There were no business divestments completed during the period.
Following the successful transition of our primary listing to the New York Stock Exchange on 25 September, CRH will transition to US GAAP reporting. We expect to file our full-year 2023 results under US GAAP on form 10-K together with an IFRS to US GAAP reconciliation on 29 February 2024. Quarterly reporting on form 10-Q will commence in May 2024.
Financial restatements under US GAAP for full-year 2021 and 2022, including IFRS to US GAAP reconciliations, will be published in advance of our full-year 2023 results
1 Prior year income statement information is presented on a continuing operations basis, excluding the results of the Building Envelope business which was divested in April 2022 and has been classified within discontinued operations.
2 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 13:00 GMT / 08:00 EST on Tuesday, 21 November 2023 to discuss the Earnings Update. Registration for this call can be made here. A recording of the conference call will be available on the Results & Presentations page of the CRH website.
| Albert Manifold | Chief Executive |
| Jim Mintern | Chief Financial Officer |
| Frank Heisterkamp | Director of Capital Markets & ESG |
| Tom Holmes | Head of Investor Relations |