8-K

CRH PUBLIC LTD CO 8-K Report (Nov 24, 2020)

Filed November 24, 2020For Securities:CRH

Summary

CRH Public Limited Company's (CRH) November 2020 trading update indicates a resilient performance despite challenging market conditions attributed to the global pandemic. For the nine months ending September 30, 2020, the company reported a 3% decrease in like-for-like sales, reaching $20.6 billion. However, CRH demonstrated strong operational management, achieving a 2% increase in like-for-like EBITDA to $3.4 billion and a 100 basis point improvement in EBITDA margin to 16.6%. This performance underscores effective cost rationalization and mitigating actions taken to counter lower sales volumes. The company anticipates a full-year EBITDA exceeding $4.4 billion, surpassing 2019 levels on a like-for-like basis, reflecting confidence in its business model and operational resilience. CRH also expects a year-end net debt to EBITDA ratio of approximately 1.4x, indicating robust cash generation and effective balance sheet management. Key strategic moves include the agreement to divest its Brazil cement business and an expected non-cash impairment charge of approximately $0.8 billion in Q4, primarily related to its UK and China investments, reflecting the impact of COVID-19 and Brexit.

Key Highlights

  • 1Despite a 3% year-over-year decrease in like-for-like (LFL) sales for the nine months ended September 30, 2020, CRH achieved a 2% LFL increase in EBITDA to $3.4 billion.
  • 2EBITDA margin improved by 100 basis points to 16.6% over the same period, showcasing effective cost management and operational efficiency.
  • 3The company forecasts full-year 2020 EBITDA to exceed $4.4 billion, surpassing 2019 LFL performance.
  • 4CRH expects a strong year-end net debt to EBITDA ratio of approximately 1.4x, highlighting solid cash generation and prudent financial management.
  • 5A non-cash impairment charge of approximately $0.8 billion is anticipated in Q4 2020, primarily impacting UK and China businesses due to COVID-19 and Brexit.
  • 6An agreement has been reached to divest the Brazil cement business for $0.2 billion, subject to regulatory approval.
  • 7The Building Products division showed particular strength, with LFL sales up 3% and LFL EBITDA up 9% for the nine-month period.

Frequently Asked Questions

For the nine months ended September 30, 2020, CRH reported like-for-like sales of $20.6 billion, a 3% decrease compared to the prior year. However, like-for-like EBITDA increased by 2% to $3.4 billion, and the EBITDA margin improved by 100 basis points to 16.6%.

CRH anticipates its full-year 2020 EBITDA to exceed $4.4 billion, which is expected to be ahead of its 2019 performance on a like-for-like basis. The company also projects its year-end net debt to EBITDA ratio to be approximately 1.4x.

CRH expects to recognize a non-cash impairment charge of approximately $0.8 billion in the fourth quarter, primarily related to its UK business and an associate investment in China, reflecting the combined impacts of COVID-19 and Brexit. Additionally, an agreement has been reached to divest its Brazil cement business for $0.2 billion, with the transaction expected to close in 2021.

The Building Products division demonstrated strong performance, with nine-month like-for-like sales increasing by 3% and like-for-like EBITDA growing by 9% year-over-year. This segment benefited from robust demand in architectural products, particularly in North America's residential repair and maintenance market.