CRH sees 31% hike in group net profit in 2018

CRH sees 31% hike in group net profit in 2018
28 February 2019

CRH reported a six per cent increase in sales revenues to EUR26.79bn in 2018 from EUR25.22bn in 2017. The company’s EBITDA advanced seven per cent to EUR3.365bn in 2018 when compared with EUR3.146bn the previous year. Group net profit jumped 31 per cent to EUR2.521bn from EUR1.919bn in the year-ago period.

The company attributes the robust results to strong financial discipline with EUR2.4bn  operating cash flows from continuing operations and a year-end net debt-EBITDA ratio of over 2.1 times. Despite weather disruption and an inflationary cost environment, there was continued profit growth and margin improvement, with EBITDA margin up 10 basis points to 12.6 per cent YoY.

CRH's CEO, Albert Manifold, said: "2018 was another year of record profit delivery for CRH. We benefited from good demand and continued favourable market fundamentals in the Americas coupled with positive underlying momentum in Europe. Both were experienced against a backdrop of energy-related input cost inflation and significant weather disruption throughout the year but with a continued focus on performance improvement and operational delivery, margins were ahead of last year. Supported by strong cash generation, we continued to deliver value through efficient capital management, completing EUR3.6bn of acquisitions and EUR3.0bn of disposals, while returning EUR0.8bn to shareholders in the year through our share buyback programme."

Sales in its Materials division were up four per cent in the Americas on a like-for-like (LfL) basis to EUR8.951m when compared with 2017. EBITDA advanced two per cent LfL, but margins were impacted by weather disruption and rising input costs in terms of energy, labour and logistics. Around 55 per cent of the company’s deliveries are to the infrastructure segment, which has a favourable funding environment. Positive trends were also seen in the residential and non-residential markets. Furthermore, CRH’s North America cement integration is progressing well.

In the Americas Products segment the company’s key regions reported strong growth with sales up two per cent on a LfL basis to EUR4.433bn and EBITDA by six per cent to EUR603m. Cost reduction and performance initiatives proved beneficial.

In the European market economic growth continued in 2018 with solid underlying construction demand in continental Europe although the UK was impacted by political uncertainty. While cement volumes were ahead, energy and labour costs increased.

Heavyside sales advanced by four per cent LfL to EUR7.611bn as did EBITDA, which increased to EUR911m. The Lightside segment saw growth in all product areas with sales up five per cent LfL to EUR1.508bn and EBITDA advancing five per cent to EUR152m. Its Distribution business completed the divestment of DIY Benelux operations with a wider strategic review ongoing. Sales were down three per cent to EUR3.856m and EBITDA slipped by one per cent to EUR181m.

In Asia expanding construction markets provided robust demand with volumes and prices rising. The company implemented improvements in its operations and reduced costs to improve its profitability by the end of this year. LfL sales advanced by eight per cent to EUR431m, but EBITDA contracted by 44 per cent to EUR25m as energy costs significantly increased.

For 2019 CRH expects the US economy to continue its current growth pace. Continued progress is also forecast in Europe, but Brexit uncertainty is noted.

"CRH remains well positioned to build upon the gains made in 2018. With a relentless focus on continuous business improvement, margin expansion, cash generation and returns for shareholders, together with continued strong financial discipline and efficient allocation of capital, we believe 2019 will be a year of progress and further growth for the Group,” according to Mr Manifold.

In addition, the company expects its EUR1bn share buy-back to continue with EUR800m already completed.

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