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CRH expected to lower outlook for second half

Last updated: 09:59 21 Aug 2022 BST, First published: 16:29 19 Aug 2022 BST

CRH PLC -

CRH PLC (LSE:CRH), the US-focused construction materials supplier, is expected to give guidance for a slower second half at its half-year results this coming Thursday. 

Shares in Dublin-headquartered, FTSE 100-listed group's climbed strongly during the pandemic, partly on expectations that President Biden’s infrastructure bill would lead to strong demand.

The shares have waned 18% in 2022 – relatively solid compared to some – helped by a share buyback and a positive first quarter update in April.

Boss Albert Manifold acknowledged at the time that “a number of challenges and uncertainties continue”, offset by a “favourable” demand backdrop.

He said sales, cash profits and margins for the first half were all expected to be ahead of the prior year, though this would be “absent any major dislocations in the macroeconomic environment”, which as well as North America, spans Europe and Southeast Asia too.

Analysts at UBS expect first-half sales to be up 9.4% on a like-for-like (LFL) basis to US$14.6bn, up 4% year-on-year, with underlying earnings (EBITDA) of US$2.03bn.

Net debt is expected to be US$4.6bn, before the US$1.85bn acquisition of Barrette that was completed last month and the US$0.6bn spent on 11 bolt-on acquisitions in the first quarter.

The group’s also expected to confirm another US$0.3bn of share buybacks, doubling the total for the year.

But analysts at AJ Bell noted that housing markets are cooling, “and big infrastructure projects are often shelved or delayed during recessionary periods” so investors will be keen to hear if there’s been any change in the company’s outlook.

Those at UBS noted that CRH tends to give directional guidance for the second half at this stage of the year.

“After a strong H1, we expect more modest LFL EBITDA growth of +2% against a relatively tough basis of comparison and also softening end markets,” they said.

“We note more optimistic outlooks issued by peers for H2 both across Europe and the US which supports some growth for the second half.”

UBS also named the company as one of just five FTSE 350 "quality stocks" that it saw as still trading on "recessions discounts".

 

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