#2 32 - crh plc · crh plc, may 2018 25 disclaimer in order to utilise the “safe harbor”...
TRANSCRIPT
CRH plc, May 2018 1
€27.6bn Revenue
€3.3bn EBITDA
#2 Worldwide
32 Countries
85,000 People
Fortune
500 Company
Euro Stoxx
50 Company
FTSE
100 Company
A Global Building Materials Group
CRH plc, May 2018 2
Natural demand for construction products driven by:
• Population growth
• Economic development
• New-build and repair, maintenance & improvement
The Industry is fragmented:
• Opportunities for acquisitions … room to grow
• Significant benefits of scale … locally, regionally, globally
Why Invest in Building Materials?
… Long-term drivers of construction growth
CRH plc, May 2018 3
Why Invest in Building Materials?
… Strong fundamentals underpin growth in our main markets
100
110
120
130
140
150
160
1970 1980 1990 2000 2010
US
EUR
Population Growth
100
125
150
175
200
225
250
275
300
1990 1995 2000 2005 2010 2015
US CAGR
+4%
Construction Growth
100
150
200
250
300
350
1990 1995 2000 2005 2010 2015
US CAGR
+4%
EUR CAGR
+3%
GDP Growth
1970 2017 1990 2017 1990 2017
EUR CAGR
+3%
CRH plc, May 2018 4
1970s
1980s
1930s
‘07
‘08
‘09 ‘10
‘11 ‘12
‘13 ‘14 ‘15
‘16
‘17 ‘18F
-75%
-50%
-25%
0%
0 1 2 3 4 5 6 7 8 9 10 11 12
% D
eclin
e f
rom
peak
Year
1973-1978 1979-1985 1929-1941 2006-2018F
Still some way to run in the cycle …
1970s 1980s 1990s
‘08
‘09
‘10 ‘11
‘12 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18F
-60%
-40%
-20%
0%
0 1 2 3 4 5 6 7 8 9 10 11
% D
eclin
e f
rom
peak
Year
1973-1980 1980-1989 1991-1998 2007-2018F
Source: Global Cement Report, US Geological Survey, PCA, UN, Morgan Stanley
Recovery in early stages …
Where are we in the Recovery Cycle? Our main markets …
U.S. Europe
U.S. Cement Demand Europe Cement Demand
CRH plc, May 2018 5
€28bn
Revenue
€3.3bn EBITDA
2017
+124%
+97%
+53% €18bn
Revenue
€1.5bn EBITDA
2013
CRH … Performance & Growth
€2.3bn Free Cash
€1.2bn Free Cash
+87%
Free Cash = EBITDA +/- WC movements - Interest - Tax
€13bn Market Cap
€25bn Market Cap
CRH plc, May 2018 6
• Significant portfolio review initiated in 2014 … €4bn+ divestment proceeds
• Since then, we have reallocated capital & reshaped our business
• This also included value-accretive M&A … €10bn acquisitions
• Increasing our exposure to higher growth markets e.g. Southern / Western U.S. and Eastern Europe
• Leading to structurally higher margins, a better business mix … and improving returns & cash
CRH … a Better Business
… Continuously adapting to changing markets
CRH plc, May 2018 7
1.5 1.6
2.2
3.1 3.3
1.2
1.7
2.2
2.7
3.2
3.7
2013 2014 2015 2016 2017
18.0
18.9
23.6
27.1 27.6
15
20
25
30
2013 2014 2015 2016 2017
Sales (€bn)
EBITDA (€bn)
CAGR
+11%
CAGR
+22%
Strong growth in Sales and EBITDA …
CRH plc, May 2018 8
6%
7%
9%
10%
11%
5%
7%
9%
11%
2013 2014 2015 2016 2017
8%
9% 9%
12% 12%
7%
9%
11%
13%
2013 2014 2015 2016 2017
EBITDA % Returns %
+400bps +500bps
Returns = EBIT / Net Assets
Improved Margins and Returns …
CRH plc, May 2018 9
1.2 1.3
2.3 2.4 2.3
0.5
1.0
1.5
2.0
2.5
2013 2014 2015 2016 2017
Free Cash Flow (€bn)
Generating Strong Cash Flows …
• Converting ~80% of profits into cash
• Generating €2bn+ cash p.a.
• ... before disposals
Free Cash = EBITDA +/- WC movements - Interest - Tax
CRH plc, May 2018 11
(Divested Jan 2018)
Building a Simpler & More Focused Business
(i) Europe Heavyside and Asia
(ii) Europe Lightside, Europe Distribution and Americas Products
(iii) 2017 reported, continuing operations
Europe
Heavyside
Europe
Lightside
Europe
Distribution
Americas
Products
Americas
Distribution Asia
Previous Structure
Americas
Materials
… Further re-shaping the Group for future growth
Europe
Materials (i) Building
Products (ii)
Narrower
&
Deeper
New Structure (Jan 2019)
Americas
Materials
~30% of EBITDA (iii) ~30% of EBITDA (iii) ~40% of EBITDA (iii)
CRH plc, May 2018 12
Building Products … Establishing a Global Platform
• Related businesses, organised under separate structures in Europe and U.S.
• Now combining regional structures to form one global platform … together, ~30% of Group EBITDA
• Significant further opportunities for growth and value creation
• Strong track record of profitable growth … leadership positions in high-growth segments
• Leverage our scale & capabilities … and benefit from horizontal integration & network synergies
• Meet the changing needs of construction
… Creating value through our global scale
CRH plc, May 2018 13
Strategic Review of Europe Distribution
• Leading European distributor of Building Materials …
… €4bn sales across 6 countries in a number of different segments
• Mixed performance in recent years … Strategic Review of the business is underway
• This will be focused on improving our margins & returns …
… and will also explore other strategic options
… Identifying opportunities to create further value
CRH plc, May 2018 14
As Announced at our Recent AGM (April 2018) …
CRH plc, May 2018 15
United States
• Solid fundamentals
• Funded Infra programmes to drive investment (+3% p.a.)
• Continued Res (+3% p.a.) … Non-Res (+2% p.a.) demand
• Positive price dynamics in the marketplace
Canada
• Favourable backdrop … construction market growth +2% p.a.
• Pricing in line with recent trends
Market Outlook to 2021 … North America
CRH plc, May 2018 16
• Market recovery driven by residential sector
• Recovery underway across European markets (+2% p.a.) …
… Eastern Europe … strong new-build growth (+5% p.a.)
… Western Europe … RMI focus (+1% to +2% p.a.)
• Pricing continuing to show signs of recovery
Market Outlook to 2021 … Europe
CRH plc, May 2018 17
• Recent years … guided organic leverage of 15% to 20%
• Our improving business mix brings …
… structurally higher margins
… with better cash generation
… and higher returns
CRH by 2021 … Higher Operating Leverage
Now guiding operating
leverage of 20%+
CRH plc, May 2018 18
CRH by 2021 … Higher Margins
• Our business mix is narrower & deeper …
… driving greater value through our operations
• Enhancing our Process efficiencies
• Leveraging our scale … increasing Procurement savings
• Simpler, leaner structures supporting our businesses Targeting EBITDA margin
improvement
of 300bps by 2021
CRH plc, May 2018 19
CRH by 2021 … Generating More Cash
• Continued strong cash conversion (FCF / EBITDA) of 70%+
• Working capital discipline
• Strong capex management … guiding to be broadly in line with depreciation
• Continued commitment on dividends
• Maintain investment grade credit rating …
… guiding net debt / EBITDA at 2.0x
… provides €7bn unutilised
financial capacity by 2021 …
… before divestments
Free Cash = EBITDA +/- WC movements - Interest - Tax
CRH plc, May 2018 20
Efficient Capital Management … Portfolio Review
• In 2014 … announced a €1.5bn to €2bn divestment programme …
… realised in excess of €4bn
• Continuously managing our asset base …
… an embedded practice in CRH
• Delivering value through efficient recycling of capital Further €1.5bn to €2bn
of divestments over the
medium-term
CRH plc, May 2018 21
Capital Allocation … Significant Optionality
• Value-accretive Capex … Supporting our business ... low risk investments
• Dividends … Continued commitment
• Value-driven M&A … Significant opportunities
• Surplus Cash … Return to shareholders
… Relentless focus on shareholder value
CRH plc, May 2018 22
Key Takeaways …
• Organisation … Simpler with 3 divisions … global Building Products … review of Europe Distribution
• Market outlook … Solid fundamentals … N. America +2% to +3% ... Europe +2%
• Operating leverage … Guiding operating leverage of 20%+
• EBITDA margins … Targeting EBITDA margin improvement of 300bps by 2021
• Efficient Capital Management … further €1.5bn to €2bn of divestments over the medium-term
• Cash generation … capacity of €7bn after capex & dividends … before divestments
• Capital allocation … value-accretive capex … dividends … value-driven M&A … surplus cash returns
CRH plc, May 2018 23
CRH plc, May 2018 24
Building Products Overview (2017)
€m Europe Lightside Europe Distribution Americas Products Building Products
Sales 1,440 4,145 4,327 9,912
EBITDA 143 269 573 985
EBITDA Margin 9.9% 6.5% 13.2% 9.9%
EBIT 102 207 435 744
Construction
Accessories, 35%
Architectural
Products, 30% Network Access Products &
Perimeter Protection, 20%
Shutters &
Awnings, 15%
General Builders
Merchants, 60%
SHAP, 20% DIY, 20%
Architectural
Products, 45%
Building
Envelope®, 35%
Precast, 20%
Residential, 40% Residential, 75% Residential, 45%
Non-Res, 40% Non-Res, 20%
Infra, 5% Infra, 20%
Non-Res, 50%
Infra, 5%
Residential, 57%
Non-Res, 36% Infra, 7%
Americas
Products, 44%
Europe
Distribution, 42%
Europe
Lightside, 14%
Product and sector exposures are based on sales
CRH plc, May 2018 25
Disclaimer
In order to utilise the “Safe Harbor” provisions of the United States Private Securities Litigation Reform Act of 1995, CRH public limited company (the
“Company”), and its subsidiaries (collectively, “CRH” or the “Group”) is providing the following cautionary statement.
This document contains certain forward-looking statements with respect to the financial condition, results of operations, business, viability and future
performance of CRH and certain of the plans and objectives of CRH. These forward-looking statements may generally, but not always, be identified by
the use of words such as "will", "anticipates", "should", "expects", "is expected to", "estimates", "believes", "intends" or similar expressions.
By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may or may not
occur in the future and reflect the Company's current expectations and assumptions as to such future events and circumstances that may not prove
accurate.
A number of material factors could cause actual results and developments to differ materially from those expressed or implied by these forward-looking
statements, certain of which are beyond our control, as detailed in the section entitled “Risk Factors” in our 2017 Annual Report on Form 20-F as filed
with the US Securities and Exchange Commission.
You should not place undue reliance on any forward-looking statements. These forward-looking statements are made as of the date of this document.
The Company expressly disclaims any obligation to update these forward-looking statements other than as required by law.
The forward-looking statements in this document do not constitute reports or statements published in compliance with any of Regulations 6 to 8 of the
Transparency (Directive 2004/109/EC) Regulations 2007.
CRH plc, May 2018 26
Contact Information
CRH plc
Investor Relations
Stonemason’s Way
Rathfarnham
Dublin 16
D16 KH51
Ireland
Telephone: +353 1 404 1000
Email: [email protected]
Website: www.crh.com
The inclusion of CRH public limited company in any MSCI Index, and the use of MSCI logos, trademarks, service marks or index names herein, do not constitute a
sponsorship, endorsement or promotion of CRH public limited company by MSCI or any of its affiliates. The MSCI Indexes are the exclusive property of MSCI. MSCI
and the MSCI Index names and logos are trademarks or service marks of MSCI or its affiliates.