CRH H1 profit up 27%, to sell Americas distribution business

FTSE 100 building materials group CRH posted a 27% jump in first-half pre-tax profit on Thursday as it announced an agreement to sell its Americas distribution division to Beacon Roofing Supply for $2.63bn in cash.

In the six months to the end of June, pre-tax profit rose to €517m from €407m in the first half of 2016, on revenue of €13bn, up 2% from last year. The company said stabilising trends in certain European markets and satisfactory growth in the Americas more than offset reduced activity in Asia due to a challenging market environment in the Philippines.

Chief executive Albert Manifold said: "We have had a satisfactory start to 2017 with stabilising trends in key European markets and EBITDA growth in the Americas. 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.

"I am pleased to report, in line with our progressive dividend policy, the board has decided to increase the interim dividend by 2.1% to 19.2c 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."

CRH said it will use the proceeds from the divestment of its Americas distribution unit to acquire German lime and aggregates business, Fels, for €600m.

The company pointed out that while the Americas distribution business has delivered significant improvement in performance and returns in recent years, the absence of value accretive acquisition opportunities and a lack of visibility as regards a route to market leadership has resulted in a decision to divest the business now at "an attractive valuation".