ANALYSIS:THERE ARE signs that CRH could step up spending on acquisitions and development in the year ahead.
Speaking after the international building materials group released results showing that revenues for 2010 were down 1 per cent at €17.17 billion and that profits before tax were down 27 per cent at €534 million, chief executive Myles Lee indicated that the group is seeing growing opportunities for acquisition spending.
Thanks in part to a €1.2 billion fundraising two years ago, CRH has €1.5 billion to spend.
Historically, it has been an acquisitive company, with much of its growth coming via the purchase of smaller rivals that it absorbs quickly into the overall group.
It has also bought bigger companies, such as Apac is the south-western US, which positioned it as one of the biggest suppliers of asphalt in North America.
Despite expectations that the 2009 fundraising would see CRH increase such activity, it did not happen for various reasons – in part because target companies were seeking too much.
Last year, the group spent just €150 million in the first half of its financial year.
That jumped to €400 million in the second six months. It looks like this momentum is continuing into 2011.
Mr Lee said yesterday that the pipeline of acquisition opportunities was growing and that signs are quite encouraging.
“We would aspire to be more active generally in 2011 than in 2010,” he said.
The group expects to return to growth this year. There is scope for some organic growth in a number of its eastern European markets, particularly Poland, which is benefiting from EU infrastructure funding and increased construction activity to prepare, with Ukraine, to host football’s European Championship finals in 2012.
In the US, the federal government has yet to agree on a final highway building budget for this year, but Mr Lee expects that it will be around the same level as 2010, which was $42 billion.
CRH: 2010 results
Revenue: €17.17 billion (-1%)
Pretax profit: €534 million (-27%)
Earnings per share: 61.3 cent (-31%)
Dividend per share: 63.5 cent (no change)
SUMMARY
Revenues and profits at CRH fell last year as pressures continued in the building material group's main European and US markets, but the final outcome was in line with the company's and market's expectations.
Revenue was down 1 per cent at €17.17 billion, while pretax profits, after impairment charges, fell 27 per cent to €534 million.
Operating profits fell 27 per cent to €700 million.
The company is leaving the dividend unchanged at 63.5 cent. The company said yesterday that the Irish market, which accounts for less than 5 per cent of its overall business, was particularly badly hit in 2010 as the slump in construction here continued.
