Building materials supplier CRH rose on Friday, as it announced solid profits growth during what is a usually quiet period for the firm.
At £66.96 per share, CRH’s share price was last trading 3.9% higher in end-of-week business on the London Stock Exchange.
Revenues at the Dublin business rose 2% in the March quarter, to $6.5 billion. This pushed adjusted earnings before interest, tax, depreciation and amortization (EBITDA) 15% higher, to $445 million.
CRH said that “early-season project activity and favorable weather in certain regions of North America” drove sales at the start of the year, while positive pricing momentum and contributions from acquisitions also bolstered the top and bottom lines.
The firm’s adjusted EBITDA margin improved 60 basis points year on year, to 6.8%.
CRH said that these factors offset lower volumes in Europe.
Buybacks Heat Up
CRH — which recently switched to paying quarterly dividends — also announced it will pay a dividend of 35 US cents per share for the January to March period. This represents an annualised increase of 5%.
The business also announced plans to repurchase a further $300 million of its shares by 7 August. It has already bought back $600 million worth of stock in the year to date.
Since its share buyback commenced six years ago, CRH has made share buybacks totalling $7.6 billion.
Guidance Affirmed
The company confirmed that it still expects to deliver adjusted EBITDA of between $6.55 billion and $6.85 billion in 2024.
Noting that “while it is still early in the construction season,” CRH said that “we expect a favorable market backdrop and continued positive pricing momentum in 2024.”
It said that “our operations in North America are expected to benefit from significant infrastructure activity in our markets and increased investment in key non-residential segments, while in Europe, we expect good underlying demand in infrastructure and key non-residential markets.”
CRH predicted that near-term residential construction will “remain subdued” across its markets, however.
“Good First Quarter”
CRH chief executive Albert Manifold said that “we are pleased to report a good first quarter performance in what is the seasonally least significant period for our business.
He added that “we believe the strength of our balance sheet together with our relentless focus on the efficient allocation of our capital enables us to capitalize on the opportunities we see for further growth and value creation in 2024 and beyond.”
Positive Outlook
Analyst Adam Vettese of eToro commented that “the fact that building materials cost more than they did and those costs are here to stay might have represented a cause for concern for CRH investors, but that simply doesn’t seem to be the case with revenues creeping up in what is ordinarily a slower quarter for the firm.”
He added that “increased share buybacks and a bumped up dividend will go further towards investors feeling good about the nearly 20% uplift shares have enjoyed already this year, and looking forward to further strong performance to come.”
Royston Wild owns shares in CRH.
