* Says has made positive start to this year
* Will sell 45 businesses, reviews further operations
* Takes 755 mln euro impairment charge ahead of disposals
* Shares up 4.4 pct after CEO promises better returns
By Padraic Halpin
DUBLIN, Feb 25 Irish building supplies group CRH
expects the restructured business to boost margins and
return to profit growth this year after posting full-year
earnings ahead of guidance on Tuesday.
Shares in CRH climbed by more than 4 percent after new Chief
Executive Albert Maniford spelt out his vision for a leaner
group and said that 2013 should represent a trough in the
After announcing a review of its portfolio in November, CRH
said on Tuesday that it would sell 45 businesses representing 10
percent of net assets and would continue to keep tabs on other
operations accounting for 20 percent of assets.
"We did an awful lot more right than wrong but at least we
started to understand where we went wrong," Manifold said in a
presentation to investors in London. "We put our hand up and
said, yes, we made a mistake. We will never again go down the
road of buying market trends."
CRH has generated 2 billion euros from disposals since 2007,
having spent about 24 billion euros on bolt-on acquisitions over
the past 12 years. That spree averaged almost a deal a week,
He added that 70 percent of the business pinpointed for sale
on Tuesday were acquired between 2000 and 2006 when there was
very strong constuction growth, built on easy credit.
"We have always managed our businesses well, now we're going
to manage our portfolio very well," Manifold said. "We are going
to see a narrower portfolio but deeper investment. Our objective
is to bring returns and margins back to peak in the coming
Manifold, a 15-year CRH veteran who took charge last month
after the retirement of Myles Lee, said his gut feeling was that
most of the businesses still under review would be kept and that
the group does not need to engage in a fire sale.
The Dublin-based company took a non-cash impairment charge
of 755 million euros ($1 billion) ahead of the sale of the
mostly European operations identified for disposal. Those
businesses accounted for 3 percent of earnings before interest,
tax, depreciation and amortisation (EBITDA) last year.
It said it does not expect further impairment charges if it
decides to exit any of the other businesses under review.
The company's London-listed shares were up 4.4 percent by
"It's a pretty radical shake-up. The focus is back to the
old-sytle CRH, of getting back to peak margins of 12 to 13
percent - and that makes pleasant music to investors' ears," one
Full-year EBITDA fell 6 percent to 1.48 billion euros but
was ahead of guidance offered in November.
Encouraged by improved trading so far this year, Manifold
said that he expects a return to profit growth in 2014.
An unusually long period of bad weather resulted in a sharp
fall in 2013 first-half earnings, but revenue rose by 2 percent
in the second half thanks to a strengthening construction market
in the United States and signs of increased economic stability
CRH's more positive outlook matches that of France's
Saint-Gobain, Europe's biggest supplier of building
materials, which last week said that cost savings, innovation
and a recovery in the United States would help operating profit
to rebound this year.