Trump tax cut may net CRH additional €140m on US deal

CRH’s net gain from the sale of its US distribution business may increase by €140 million as a result of Donald Trump’s sweeping tax reforms, according to stockbroker Davy.

Davy analyst Robert Gardiner said in a note to clients on Thursday that the €2.2 billion gross proceeds from the sale of Allied Building Products, completed this week, are likely to have delivered a gain of €1 billion for the largest publicly-quoted company in Dublin.

However, Mr Trump’s signing of new tax laws on December 22nd cutting the US corporate tax rate from 35 per cent to 21 per cent should reduce the tax bill on the transaction to €210 million, rather than €350 million, Mr Gardiner said.

While CRH had previously indicated that the US tax reforms would cut its normal 28 per cent effective tax rate by between 0.5 and three percentage points, Davy estimates that the company will enjoy "at least" a three-point cut as a result of the measures.

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The analyst said that a revaluation of CRH’s existing €1.89 billion of deferred tax liabilities, as of the end of last June, would “result in a significant once-off non-cash gain” for the group.

“We believe the tax changes passed in the US are more beneficial to CRH than initial expected,” Mr Gardiner said.

Davy expects that CRH’s net profits will increase to €1.52 billion this year from €1.34 billion in 2017, though the benefit of US tax reforms could boost the 2018 outcome by 5 per cent.

Shares in CRH surged 2.9 per cent on Thursday to €30.85, giving the group a market valuation of €25.9 billion.