CRH eyes more share buybacks, acquisitions amid bright outlook

© Reuters. CRH eyes more share buybacks, acquisitions amid bright outlook

By Padraic Halpin

DUBLIN (Reuters) – Irish building materials group CRH (LON:) grew its earnings by 3 percent last year and said on Thursday that further expected growth in 2019 would likely open the door for more share buybacks and acquisitions.

CRH, the world’s second-biggest building materials supplier by market capitalisation, launched its first share buyback programme in a decade last year and will complete the repurchase of 1 billion euros (855 million pounds) of shares at the end of March

After generating 2.4 billion euros in cash from its operations last year, CRH Chief Financial Officer Senan Murphy told Reuters it would “absolutely” consider more buybacks.

“We’re generating a lot of cash and that gives us options. Assuming we get shareholder approval to continue to proceed, then we’ll obviously look at further phases of buyback into the future,” Murphy said in a telephone interview.

Big spending CRH held back on major acquisitions last year as it digested the $3.5 billion purchase of U.S. cement maker Ash Grove agreed in 2017.

Chief executive Albert Manifold told Reuters his finger would remain on the “pause button” for the first half of this year – even though that still allowed it to spend more than 600 million on 45 smaller deals throughout 2018 – and that it would look at larger options from the second half.

CRH also decided to streamline some of its European and American businesses under one division last year, at the same time as announcing a strategic review of its Europe Distribution unit.

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Manifold said the review was ongoing and would be completed within six months. He described the 3.8 billion euro unit as a “fine business” that improved in the second half of last year and that the call would purely be a capital allocation decision.

CRH’s earnings of 3.37 billion euros last year were driven by 3 percent growth in both Europe and in the Americas, where it is the biggest producer of asphalt for highway construction and third biggest supplier of ready-mixed concrete and construction aggregates.

Analysts at Davy Stockbrokers said CRH’s “equally judicious capital allocation strategy in 2019” should benefit shareholders both in terms of dividend and buyback returns, as well as share price performance.

The group’s shares were 1.3 percent higher at 27.91 euros by 0820 GMT, having risen 20 percent so far this year.

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