Buildings materials group CRH PLC (LON:CRH) has announced the sale of its US distribution business and the acquisition of Germany’s Fels as it reported its first half results.
The Dublin-based company will sell the US distribution business to Beacon Roofing Supply for US$2.6bn, representing 16 times underlying earnings (EBTIDA).
CRH said the decision to divest the business was due to the “absence of value accretive acquisition opportunities and a lack of visibility as regards a route to market leadership”.
The US accounts for almost two thirds of group earnings, supported in recent years by increased public spending under the Obama administration’s Fixing America’s Surface Transportation policy for repairing US highways.
The industry was expected to receive support from US President Donald Trump's plans to boost infrastructure spending but he has yet to deliver on his promise amid friction within the government.
Fels deal to give CRH leverage in European lime market
CRH has purchased Fels, a lime and aggregates business, for €600mln, seven times EBITDA. It will be integrated into the existing lime business of CRH.
CRH said in a statement that the deal will give it a number two position in the European lime market while providing a platform for further growth.
“The acquisition and divestment activity announced by the group today, demonstrates our ongoing strategic focus on allocating and reallocating capital at attractive multiples, while our significant balance sheet capacity ensures we are well positioned for further growth,” said chief executive Albert Manifold.
CRH reports first half profit and sales growth
Alongside the announcement, CRH reported a 2% increase in first half sales to €13bn and a 27% rise in pre-tax profits to €517mln compared to the year-ago period.
Like-for-like sales in the Americas market were up 1% on last year, European sales were 3% higher, while Asia saw an 8% decline.
EBIDTA rose 5% to €1.175bn and the group increased its interim dividend by 2.1% to 19.2 euro cents per share.
"For the second half of the year, despite currency headwinds and continuing challenging conditions in the Philippines, we expect a continuation of the first half momentum experienced in Europe and EBITDA growth in the Americas, which will result in another year of progress for the group,” Manifold said.
Shares rose 3.31% to 2,779p in early trading.