ACCESS Newswire
24 Nov 2020, 12:31 GMT+10
DUBLIN, IRELAND / ACCESSWIRE / November 24, 2020 /
Key Highlights
Albert Manifold, Chief Executive, said today:
'As we continue to navigate these challenging times, the health and safety of our people remains our number one priority and is a core focus in our business each and every day. Markets continue to be impacted by the global pandemic and while we have seen some lower activity levels, I am pleased to report further improvement in trading performance, with an advance in both profitability and margins. The outlook for the coming months remains uncertain and visibility is limited, however, I am confident that we are well positioned for the challenges and opportunities that lie ahead.'
Announced Tuesday, 24 November 2020
Health & Safety
As new waves of COVID-19 infections emerge across many of our markets, the health and safety of our people remains our number one priority. Our approach to workplace safety is uncompromising and our primary focus is to ensure that we provide a safe working environment for our employees, contractors and customers, enabling them to carry out their activities in accordance with the various health and safety protocols currently in place across our markets.
Trading Summary
Cumulative nine-month sales to the end of September amounted to $20.6 billion, a decrease of 3% compared with the corresponding period in 2019, maintaining the level of sales decline reported at the half year stage.
Third quarter trading in our Building Products Division was ahead, benefiting from strong residential repair, maintenance & improvement (RMI) demand in North America. While activity began to recover in Europe Materials in Q3, year-to-date sales remained behind prior year. In Americas Materials, Q3 sales performance was impacted by unfavourable weather conditions and a strong prior year comparative.
Despite the lower sales, EBITDA for the period was $3.4 billion, up 1% on prior year and up 2% on a like-for-like basis reflecting a continued strong focus on cost rationalisation and mitigating actions to minimise the financial impacts of lower sales caused by the pandemic. The Group reported $65 million of non-recurring COVID-19 related restructuring items in the first six months of the year and we expect to incur similar costs in the second half.
Trading Outlook
Based on the underlying trends in our businesses and recognising continued uncertainty across our markets, we expect full-year EBITDA to be in excess of $4.4 billion for 2020. For now, there is limited visibility into 2021, however the longer-term prospects for CRH remain positive, given our significant financial strength and operational resilience together with a portfolio of high-quality assets in attractive markets.
1 Like-for-like movements exclude the impact of currency exchange, acquisitions, divestments and non-recurring items.
Americas Materials
Nine-month like-for-like sales for our Americas Materials operations were 4% behind the equivalent period in 2019. Our North region was particularly impacted by COVID-19 restrictions earlier in the year while volumes in South were also impacted by delayed state lettings and unfavourable weather conditions. This was partly offset by healthy market fundamentals and solid backlogs in our West region along with pricing progress in most product lines. However, Q3 sales in the West region were impacted by unfavourable weather and wildfires in August and September. Our Cement business in North America experienced lower volumes in the first nine months of the year, however these were offset by pricing gains.
Like-for-like EBITDA for Q3 was ahead of 2019, resulting in nine-month EBITDA 9% ahead with solid price progression, good cost control and lower energy costs.
Key Products in Brief
Europe Materials
Nine-month like-for-like sales were 7% behind 2019, an improvement on the half year as trading activity recovered during Q3; however this was not sufficient to offset the impact of significant COVID-19 related government interventions and shutdowns in the second quarter. The United Kingdom (UK) which was one of the most significantly impacted markets saw some improvement in Q3 although activity levels are still below pre-COVID levels. Western European markets experienced improved activity levels in key markets as restrictions eased. Eastern European markets continued to trade well in Q3.
Like-for-like EBITDA for Q3 was ahead of prior year as improved pricing and the benefit of cost saving measures and lower energy costs offset the impact of lower volumes. Nine-month like-for-like EBITDA was 14% behind.
Key Markets in Brief
Building Products
Nine-month like-for-like sales were 3% ahead of 2019 reflecting strong volumes in Architectural Products, improved pricing in most platforms, benefits arising from commercial excellence, ongoing profit improvement and cost rationalisation initiatives. This resulted in strong operating leverage and like-for-like EBITDA for the nine months was 9% ahead of prior year.
Key Products in Brief
Profit Before Tax Outlook
We expect full-year depreciation and amortisation expense to be in line with last year (2019: $1.7 billion).
Arising from the Group's impairment testing process and as a result of the combined economic impacts of COVID-19 and Brexit, we expect to recognise non-cash impairment charges of c. $0.8 billion in our full-year results for 2020. These charges primarily relate to our UK business and our associate investment in China.
The net gain on divestments and non-current asset disposals in 2020 is expected to be c. $20 million (2019: $189 million loss).
The Group's share of profits from equity accounted entities (pre-impairment) is expected to be lower than prior year (2019: $67 million) mainly due to the divestment of the Indian joint venture along with the impact of COVID-19 restrictions on a number of operations.
Net finance costs are expected to be broadly in line with last year (2019: $490 million).
Taking each of these elements into account together with our EBITDA outlook, we expect full-year profit before tax (pre-impairment) to be ahead of 2019 (2019: $2.2 billion).
Balance Sheet Expectations
In line with our previous guidance, year-end net debt is expected to show a significant improvement on prior year (2019: $7.5 billion), to c. $6 billion resulting in net debt to EBITDA of approximately 1.4x based on robust EBITDA performance, continued strong working capital management, lower acquisition spend, lower capital expenditure in response to lower activity levels and a pause in the Group's share buyback programme.
Acquisitions and Divestments
The Group has spent c. $181 million on 14 acquisitions to date in 2020 (including deferred and contingent consideration in respect of prior year acquisitions).
On the divestment front, the Group completed seven transactions and realised total business and asset disposal proceeds of c. $263 million, inclusive of $122 million relating to the receipt of deferred proceeds from prior year divestments.
The agreement to divest our Brazil cement business for consideration of $0.2 billion is currently subject to competition authority review and the transaction is expected to close in 2021.
CRH will report its preliminary results for the full-year 2020 on Thursday, 4th March 2021.
CRH plc will host an analysts' conference call at 08:30 GMT on Tuesday, 24 November 2020 to discuss the Trading Update. To join this call please dial: +353 (0) 1 506 0650, confirmation code 1578116 (further international numbers are available here). A recording of the conference call will be available on the Results & Presentations page of the CRH website.
Contact CRH at +353 1 404 1000
Albert Manifold Chief ExecutiveSenan Murphy Finance Director
Frank Heisterkamp Director of Capital Markets & ESG
Tom Holmes Head of Investor Relations
About CRH
CRH (LSE:CRH)(ISE:CRG)(NYSE:CRH) is the leading building materials business in the world, employing c.79,000 people at c.3,100 operating locations in 30 countries. It is the largest building materials business in North America, a leading heavyside materials business in Europe and has positions in both Asia and South America. CRH manufactures and supplies a range of integrated building materials, products and innovative solutions which can be found throughout the built environment, from major public infrastructure projects to commercial buildings and residential structures. A Fortune 500 company, CRH is a constituent member of the FTSE 100 Index, the EURO STOXX 50 Index, the ISEQ 20 and the Dow Jones Sustainability Index (DJSI) Europe. CRH's American Depositary Shares are listed on the NYSE.
For more information visit www.crh.com
Disclaimer
In order to utilise the 'Safe Harbor' provisions of the United States Private Securities Litigation Reform Act of 1995, CRH public limited company (the 'Company'), and its subsidiaries (collectively, 'CRH' or the 'Group') is providing the following cautionary statement.
This document contains statements that are or may be deemed to be forward-looking statements with respect to the financial condition, results of operations, business, viability and future performance of CRH and certain of the plans and objectives of CRH. These forward-looking statements may generally, but not always, be identified by the use of words such as 'will', 'anticipates', 'should', 'could', 'would', 'targets', 'aims', 'may', 'continues', 'expects', 'is expected to', 'estimates', 'believes', 'intends' or similar expressions. These forward-looking statements include all matters that are not historical facts or matters of fact at the date of this document.
By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future and reflect the Company's current expectations and assumptions as to such future events and circumstances that may not prove accurate.
A number of material factors could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, certain of which are beyond our control, as detailed in the section entitled 'Risk Factors' in our 2019 Annual Report on Form 20-F as filed with the US Securities and Exchange Commission.
You are cautioned not to place undue reliance on any forward-looking statements. These forward-looking statements are made as of the date of this document. The Company expressly disclaims any obligation or undertaking to publicly update or revise these forward-looking statements other than as required by applicable law.
The forward-looking statements in this document do not constitute reports or statements published in compliance with any of Regulations 6 to 8 of the Transparency (Directive 2004/109/EC) Regulations 2007.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
SOURCE: CRH PLC
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