22nd Apr 2020 08:47
(Alliance News) - CRH PLC on Wednesday said its year had started well with higher like-for-like sales in the first quarter but a "visible" Covid-19 hit starting mid-March.
Shares in CRH were up 4.8% at 2,252.00 pence in London in early morning trading.
The Dublin-based building materials business reported a 3% rise in like-for-like sales for the three months ended March 31 compared to a year before. This included an 8% rise in like-for-like sales for its Americas Materials operations, while Europe Materials was broadly flat year-on-year as a "solid start to the year" was offset by lockdowns in March.
In Building Products, like-for-like sales were up 3% from 2019. "Favourable volumes together with pricing progress across most platforms was partly offset by the impact of government implemented Covid-19 restrictions on a number of our operations in Europe and North America towards the end of the quarter," CRH noted.
In a bid to mitigate damage from the virus pandemic, CRH has opted to halt all discretionary and non-essential spending "for the foreseeable future", as well as limiting its capital expenditure to only an essential maintenance level.
CRH also has opted to shrink working capital in alignment with reduced activity levels and undertake "significant cost and restructuring actions to right-size the business in line with evolving demand levels". It is consolidating its operation locations and has frozen recruitment.
Temporary lay-offs and furloughs have also been put in place for those areas with "significant demand weakness", while CRH's board and leadership teams have all taken a 25% salary cut.
At the end of 2019, CRH had a net debt to earnings before interest, tax, depreciation, and amortisation ratio of 1.7 times. Having opted to draw down its EUR3.5 billion revolving credit facility, the company now cash and cash equivalent totalling more than USD6 billion, enough to meet all of its maturing debt obligations for the next 4.5 years with no financial covenants.
In March, CRH completed a round of share buybacks, returning EUR200 million to shareholders and taking the full buyback programme amount to EUR1.8 billion since it began in May 2018. However, given market volatility of late, the company has opted to postpone the programme until further notice.
A final cash dividend of EUR0.63 per share will be proposed at its annual general meeting on Thursday.
In terms of the pandemic's financial effects, CRH said: "The impact on CRH's profitability in 2020 cannot be reasonably estimated at this time. The group continues to monitor the situation closely and further updates will be provided when visibility improves, and we have greater clarity over the expected financial performance of the group in 2020."
However, the company added that its longer-term prospects are still positive. It will post its half-year results on August 20.
Chief Executive Albert Manifold said: "We have had a good start to the year, and although the global spread of Covid-19 brings challenges for us all, I have no doubt that with the financial strength of CRH and the experience of our leadership teams, we will endure through these unprecedented and uncertain times. All necessary actions are being taken to protect our employees and businesses, and to ensure that we are well positioned for the recovery in our markets."
By Anna Farley; [email protected]
Copyright 2020 Alliance News Limited. All Rights Reserved.
Related Shares:
CRH