CRH doubles earnings as green shoots seen in Europe

Building materials group CRH winched its half-year dividend a touch higher as it reported the early stages of an economic recovery in Europe.

Having been flat in the first quarter, European sale rose 3% in the six months to 30 June, which coupled with a slight slowing in the rapidly expanding Americas and Asia operations, saw interim group revenue grow 35% to €12.7bn.

On a proforma basis that excludes the two major acquisitions completed in the second half of 2015, sales were up 8%.

This fed through to reported earnings before interest, tax, depreciation and amortisation (EBITDA) more than double to €1.12bn, as flagged in an update last month, while on a proforma basis EBITDA was 20% higher.

"As always, we have maintained a strong focus on cash management, and with de-leveraging ahead of plan, I am pleased to report that we expect year-end debt metrics to be at, or below, normalised levels," said chief executive Albert Manifold.

Net debt swelled to €7.1bn at the period end, up by €5.9bn over the last 12 months due to acquisition spending, and up by €0.4bn in the last six months.

Against this backdrop, the board decided to increase the interim dividend by 1.6% to 18.8 euro cents per share.

"With continued positive momentum in the Americas and the modest impact of early-stage economic recovery in Europe, and assuming normal weather conditions for the remainder of the season, we expect further progress in the second half with full year reported EBITDA in excess of €3bn."

Looking at the second-half in more detail, the outlook for Europe is for a "continuation of first-half trends", while the Americas is expect to see a continuation of the positive momentum in construction markets against tougher comparatives from last year, while Asia is being boosted strong demand in the Philippines.

CRH was unwilling to speculate on the impact of the recent UK vote to leave the EU remains, save to say that remained "unclear for the medium term".

Broker Canaccord Genuity felt it was a strong set of results.

"These results are consistent with our investment thesis that the group would enjoy good underlying trading, benefit from the recent acquisitions and start to de-leverage relatively quickly," analyst wrote.

"Shares have enjoyed a strong bounce recently and now trade on a fuller rating at around 9 times EBITDA for 2017, but we believe this is supported by today’s good results."

CRH stock was up almost 3% to 2,535p not long after 1000 BST on Thursday.