Interactive Investor

ii view: CRH is a play on US infrastructure boom

26th August 2021 16:07

Keith Bowman from interactive investor

European sales have rebound but the USA is by far its biggest market. We assess prospects. 

First-half results to 30 June

  • Revenue up 15% to $14 billion (£10.2 billion)
  • Adjusted profit (EBITDA) up 25% to $2 billion (£1.46 billion)
  • Interim dividend up 4.5% to 23 US cents per share
  • EBITDA or profit margin up 1.2% to 14.2%


  • Expects second-half EBITDA to be ahead of a record prior year comparative

Chief executive Albert Manifold said:

"I am pleased to report a good first half as the strength and resilience of our business model once again delivers superior performance for CRH. Our integrated and solutions-focused approach leaves us uniquely positioned for the changing needs of construction, while our continued strong cash generation provides us with the flexibility to invest in future growth opportunities for our business. Based on current trading conditions and the positive momentum that we see across our markets, we expect second-half Group EBITDA to be ahead of a record prior year."

ii round-up:

Global diversified building materials company CRH (LSE:CRH) today reported forecast-beating profit, helped by a strong pandemic recovery for its European operations.

Like-for-like half-year sales for its European materials division rose by 17%, pushing overall adjusted group earnings up by 25% to $2 billion (£1.46 billion). That surpassed analyst forecasts of nearer $1.95 billion. Management also expects second-half profit to be ahead of the prior year, underpinned by an improving economic backdrop for its Americas business. 

CRH shares rose by more than 2% in UK trading, leaving them up by around 120% since pandemic market lows in March 2020. Shares for European rival HeidelbergCement AG (XETRA:HEI) are up by a similar amount. 

Dublin headquartered CRH employs over 75,000 people across more than 3,000 sites in 29 countries. Total sales for the period rose 15% to $14 billion. Like-for-sales for its Americas business climbed 3% year-over-year. Sales on the same basis for its building products division grew 8%.  

A 4.5% increase in the interim dividend year-over-year takes the payment to 23 US cents per share. Positive profit guidance for the second half assumes normal weather patterns for the remainder of the construction season. 

The Fortune 500 company has spent $1.1 billion year-to-date on acquisitions and expansionary expenditure. Share buybacks totalled $300 million over the first half, with a further $300 million due to be executed before early October. 

ii view:

CRH manufactures cement, aggregates, ready-mix, asphalt and various building products. It is the largest building materials business in North America, with operations in 46 US states and 6 Canadian province. It is also the largest building materials business in Europe, with operations across 19 countries. 

During the financial year 2020, the Americas division accounted for just over two-fifths of sales, with Europe making up a further third and its building products business the balance. The USA is its biggest customer, generating around 56% of sales, with the UK its second biggest single country customer at 12% of sales.  

For investors, events outside of management’s control such as the weather need to be remembered. Stretched government finances following the pandemic could also result in an easing in infrastructure spending at some point. 

But for now, government infrastructure spending in its biggest market the USA is potentially huge. Geographical and business diversity are not to be overlooked, and a dividend yield in the region of 2.2% is not derisory in an era of ultra-low interest rates. In all, and with the broad economic backdrop favourable, further long-term growth looks achievable. 


  • Diversified both by product and geographical location
  • Potential beneficiary of government stimulus programmes


  • The weather can hinder performance
  • Currency movements can provide headwinds

The average rating of stock market analysts:


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