Top 1000 2010: Company 1 - CRH
Solid as a rock
The company continues to fly the flag for corporate Ireland both home and abroad, but the recession still made its mark on CRH.
CRH is by far the biggest component of the Irish stock market. But more than that, it has continued to fly the Irish flag abroad proudly at a time when it was difficult to find much good to herald about corporate Ireland.
CRH Newsfeed
April 24th: CRH shares jump after US group boosts stake
US-based investment adviser Capital Research and Management boosted its stake in CRH to 13.4%. The purchase of more than 1.67 million shares in CRH, at an aggregate price of around €33.5m, brought Capital's total holding to 91.25 million shares. A positive analysis by Citigroup analysts also helped boost CRH's share price almost 5% to €21.20.
April 7th: CRH's Lee gets e2.4m in pay, benefits
In keeping with the times, the pay and benefits of Myles Lee, CRH chief executive, hits the headlines. It is reported that he was paid a total of €2.4m last year in pay, benefits, bonuses and pension.
March 12th: CRH buys NY materials firm
CRH's long-held policy of growth by cautious acquisition continues as its US division, Oldcastle Materials, buys New York state-based building materials manufacturer A L Blades & Sons for an undisclosed price. It produces aggregates and asphalt and employs over 250 people. CRH previously revealed that it had spent €0.46bn in 2009 on a total of 17 acquisitions, including a 26% stake in China's Yatai Cement.
March 2nd: 2009 profits slump 55% but beat expectations
CRH reports pre-tax profits of €732m for the year ending December 2009, down 55% from the previous year. Revenues fell by 17% to €17.4bn and the company says it expects demand to remain weak for much of 2010. Cold weather in both Europe and North America at the start of the year impacted on the results but they were still better than many analysts expected.
March 2nd: Dividend rises yet again
Despite a fall in profits, CRH recommends a final dividend of 44 cent per share. This is broadly in line with last year's dividend of 43.7 cent for 2008. It gives a total dividend for the year of 62.5 cent, just ahead of the dividend of 62.2 cent in 2008.
January 5th: Shares dip as CRH strikes cautious note
CRH says the timing of any sustained pick-up in developed markets next year was unclear despite recent positive newsflow, sending its shares lower.
It has already revealed that it will make more cuts this year than previously indicated, saying that while it was well-positioned to respond to evolving demand patterns, trading conditions remain difficult.
Take last year’s rights issue by the massive building materials provider. While the Irish economy appeared to be crumbling, it struck a chord of hope with the biggest rights issue in Irish corporate history, raising €1.28bn to add to its acquisition war chest (indeed it held the previous record with its €1.1bn issue in 2001).
As dark times continue to throw up casualties, CRH has the funds to capitalise on any interesting opportunities that arise – note its recent purchase in New York as an example. Analysts have long predicted that rivals such as Heidelberg Cement, Cemex and Lafarge will all sell units in an effort to cut debt.
But that is not to say that the recession has not made its mark on CRH. Until last year it had an impressive record of increasing profits for 15 consecutive years. That came to an end with a 14% decline in pre-tax profits, while this year it announced a 55% slump in 2009 profits, even if the figure did meet analysts’ expectations.
History
The company was formed in 1970 through a merger of Cement Limited and Roadstone Limited and at that time was the sole cement producer in Ireland, and the principal producer of aggregates, concrete products and asphalt. That year CRH had sales of €26m, 95% in Ireland. But the company has been transformed since then. Ireland is now a shrinking part of its overall market and last year it posted revenues of €20.887bn.
Last year, even as economies everywhere were grinding to a halt, the company spent €0.46bn on acquisitions. But this was down from the €1bn it spent in 2008. In 2007 it spent a record €2.2bn on acquisitions (just slightly more than what it spent in 2006) continuing a bullish strategy that has arguably seen it become the one true global giant of the Irish corporate world.
Soon after taking over from Liam O'Mahony at the beginning of last year, new chief executive Myles Lee indicated that he was keen to snap up assets belonging to rivals who had overstretched themselves.
The US has been good to CRH. It first moved into the US market in 1978 by acquiring Amcor, a Utah based concrete producer. But since the recession began, operating profits in this market have suffered. Nevertheless, it is likely to be a major beneficiary of the Obama stimulus package, which has highway construction as a key tenet.
CRH also has major operations across mainland Europe in countries such as Ukraine, Finland, Sweden and Poland.
The ?nancial crisis created very dif?cult market conditions for CRH's operation in Europe last year, leading to significantly reduced volumes and a drop in margins. In response, it cut costs, reduced capacity and curtailed capital expenditure.
This ultimately led to a strong cash?ow performance by the company in Europe for the year.
