CRH‘s market value soared to a record high on Tuesday as the building materials and services giant outlined plans to spend $40 billion (€34 billion) on investment and cash returns to shareholders over the next five years as it continues to grow revenues and earnings apace.
The market capitalisation of the group jumped as much as 6.1 per cent to $81.4 billion during trading on Wall Street.
Unveiling his medium-term strategy nine months into the job as CEO, chief executive Jim Mintern told an audience of analysts and investors in New York that he was targeting annual revenue growth of 7-9 per cent between out to 2030. He is aiming for the group to post adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) margins of 22-24 per cent over the period.
The margin goal would mark a step up from the rate of 19.5 per cent posted last year. The company’s margins have doubled over the 11-year period in which CRH was led by Albert Manifold, driven as the group moved from largely being a seller of cement and other base materials into full-scale construction services, with higher pricing power.
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CRH’s focus is on four key areas: aggregates, cement and sustainable alternatives, roads and water. It sees these benefitting from three infrastructure mega-trends: ongoing investment in the transport system, from roads to airports; a need to develop water management; and the reindustrialisation of the US.
“We are the number one infrastructure play in north America,” Mr Mintern said of a group that generates about 75 per cent of its earnings in that continent.
“With $40 billion of financial capacity over the next five years, our superior strategy, enabled by our unmatched scale and connected portfolio, positions us to execute on unrivalled growth opportunities,” he said.
Mr Mintern, a company veteran of more than two decades, said earlier this year that he will continue the group’s recent trend of selling off unwanted assets as it remains committed to pursuing acquisitions. However, there will be a greater emphasis on construction innovation under his leadership, he said at the time.
CRH is looking to spend about $28 billion of its $40 billion war chest over the next five years on mergers and acquisitions and capital expenditure, its new chief financial officer (CFO) Nancy Buese told attendees at the investor day.
Mr Mintern described the company’s M&A pipeline as likely to have “good momentum into the end of this year in terms of deal flow”.
It has completed 20 bolt-on acquisitions so far this year.
He suggested that investment spend over the coming years will be in line with its current earnings profile, with 75 per cent currently generated in North America and the remainder in Europe and Australia.
CRH dropped its Irish stock market listing two years ago as it moved its main quotation to New York.
CRH also reaffirmed its financial guidance for 2025, including adjusted Ebitda (earnings before interest, tax, depreciation and amortisation) of $7.5 billion to $7.7 billion.
It aims to convert more than 100 per cent of its earnings into free cash flow on average over the five years. Free cash flow is the amount of cash a company has left after accounting for running expenses and capital investment.
