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Ireland's CRH counts on cost cuts to build full-year earnings

11/24/2020 | 06:15am

DUBLIN (Reuters) - Ireland's CRH expects its 2020 core earnings to rise on a like-by-like basis and that a strong balance sheet will provide "plenty of options" for deploying capital in 2021.

CRH, the world's second-biggest building materials supplier said on Tuesday that its sales fell by 3% year-on-year in the third quarter and were 3% lower in the year to September.

However, cost cuts and other to minimise the impact of the coronavirus crisis had lifted earnings 2% higher year to date.

CRH, which gave the full-year guidance for the first time with just five weeks left of 2020, expects full-year core earnings to be in excess of $4.4 billion for 2020.

This is ahead of 2019 on a like-for-like basis, which excludes the impact of currency exchange, acquisitions, divestments and non-recurring items.

CRH reported record earnings before interest, tax, depreciation, and amortisation (EBITDA) of 4.2 billion euros ($5 billion) in 2019, before switching the currency it reports in.

Earnings were up 3% in the third quarter, versus a forecast in August that they would be in line with the prior year.

The dip in sales was driven by a 7% third quarter fall in its Americas materials division, where CRH is the biggest producer of asphalt for highway construction.

CRH Chief Executive Albert Manifold said he expected the U.S. market to be flat to slightly ahead in 2021.

The company also expects to take a $800 million full-year impairment charge as a result of COVID-19 and Brexit, mainly relating to its UK business and investment in China.

Manifold said the UK market is recovering at a slower pace than anywhere else in Europe.

After pausing share buybacks, Chief Financial Officer Senan Murphy said they remained an important part of CRH's strategy, adding that the worst of the volatility appeared to behind the sector.

CRH expects more acquisitions after spending just $181 million on 14 small deals this year and recouped $263 million from seven disposals, with another $200 million due in 2021 from the sale of its Brazilian cement business.

($1 = 0.8439 euros)

(Reporting by Padraic Halpin; Editing by Kirsten Donovan and Alexander Smith)

By Padraic Halpin

© Reuters 2021
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