CRH set to sell businesses in group review

Barry O’Halloran

CRH, is preparing to sell off under performing and non-core businesses in a review of the global network of companies controlled by the Irish building materials giant.

The group said that earnings in the first nine months of the year were €1.06 billion, slightly short of the €1.16 billion that it generated during the same period in 2012. Over the same timescale, revenues were down 1 per cent at €13.4 billion.

CRH said that it has embarked on a detailed review of its portfolio that is likely to see it embark on a significant sale of businesses beginning next year.

It explained that this will allow it to focus on those assets that deliver better returns for shareholders and to aid it in prioritising where it spends its capital to ensure profitable growth across its network of businesses.

Discussing the proposals with analysts, incoming chief executive, Albert Manifold, said that the changes involved would be "more than incremental".

He confirmed that the review is group wide and added that, while the group would update the markets in February, it would be early summer before he would have a definitive view of the strategy.

In its statement, CRH said "the review is likely to result in the decision to make further disposals of non-core businesses which, together with the impact of the continuing difficult environment in Europe, could give rise to a non-cash impairment charge in our 2013 financial statements".

Barry Dixon, analyst with stockbroking firm, Davy, suggested that this is likely to result in the group accelerating the sale of under performing businesses, which should help improve returns and growth rates.

CRH has made €2 billion from the sale of vairous businesses since 2007, including its recent disposal of its 49 per cent stake in Portoguese cement manufacturer, Secil, and its subsidiary Magnetic Autocontrol, and selling its European insulation business to Irish company, Kingspan.

It earned €230 million profit from such disposals last year and expects a €30 million surplus from these activities in 2013. Total proceeds from asset sales to the end of September were €215 million.

Meanwhile, it has stepped up its cost-cutting programme, which in August, Mr Manifold said consisted of closing, merging and mothballig operations. CRH said that it now expects to save €195 million across the group, bringing its total since 2007 to almost €2.4 billion.

Its net debt at the end of September was €4 billion, €500 million more than 12 months earlier. In the absence of any further acquisitions and based on current exchange rates, it expects the figure to be €3.2 billion at the end of this year.

To date in 2013, it has spent €660 million on buying rival businesses.