CRH to bolster margins as it explores strategic options
Building materials group CRH has begun a shake-up of its business, as it looks to merge European and US divisions and boost profits.
The FTSE 100 company – which is targeting a margin improvement of 300 basis points by 2021, barring any major disruptions to the global economy – said it had initiated a strategic review of its European distribution business, which would focus on “improving the margins and returns of the business, as well as exploring other strategic options”.
Ireland-based CRH said it would also establish a new building products division, effective 1 January 2019, which would combine three separate divisions: Europe Lightside, Europe Distribution and Americas Products.
The new division will be run by Keith Haas, current president of Americas Products, while David Dillion, who heads up the European divisions, while take on the newly created role of president, global strategy and business development.
In a statement, CRH said that creating the division would “leverage our scale and network opportunities across our global products businesses”.
CRH added that it was targeting €7bn of financial capacity over the next four years, after capital expenditure and dividends, giving it “significant opportunities for further value create for our shareholders”.
Earlier this year, CRH saw first-quarter like-for-like sales slip 2%, hurt largely by unfavourable weather conditions on both sides of the Atlantic, and first-half profits are expected to be flat. But the company kept investors onside by also announcing a €1bn share buyback, following the sale of €2.3bn of assets in the first three months of the year. It is also targeting a further €1.5-2bn of divestments, having made six bolt-on acquisitions in the quarter.
Shares in CRH rose 98p to 2778p in morning trading.