CRH’s views on sector consolidation sought next week

CRH’s views on sector consolidation sought next week
Published: 28 February 2005

CRH PLC’s views on the consolidation of the European cement industry and whether it plans to get involved in the latest round of takeover activity will be a major talking point when the Irish-based aggregates group reports its preliminary results next Tuesday.   The company, which has itself been highly-acquisitive over the past few years, was mentioned as a possible counter-bidder for Aggregate Industries PLC after Swiss group Holcim launched a UK£1.78bn takeover earlier this year.  Holcim’s move on Aggregate Industries, together with last year’s UK£2.3bn purchase of RMC Group by Mexican group Cemex, has recently reignited interest in the sector and analysts reckon more deals are likely in 2005. 

CRH spent just over Euro1bn in 2004 on a number of bolt-on deals, but investors are increasingly looking for a more ’sizeable’ acquisition given the group’s strong cash generation and interest cover of over eight times. The group’s last big deal was the Euro 693m acquisition of Dutch cement group CementBouw in 2003.  Next week’s results from the company should show another year of good underlying growth and, despite the impact of a weak dollar/euro exchange rate and higher input costs, pretax profits, after goodwill amortisation, should break the Euro1bn. The group’s house broker is predicting Euro1.01bn and earnings of 160 cents a share.