5th Jul 2005 07:00
CRH PLC05 July 2005 D E V E L O P M E N T S T R A T E G Y U P D A T E 5th July 2005 CRH ANNOUNCES FURTHER DEVELOPMENT INITIATIVES TOTALLING EURO 231 MILLION CRH plc, the international building materials group, today announces 31development initiatives totalling euro 231 million (including capitalexpenditure of euro 63 million on seven large capital projects) undertakenduring the first half of 2005. Commenting on these developments, Liam O'Mahony, CRH Chief Executive, said: "The pace of spend to date in 2005 has been somewhat lower than in recent years.However, we continue to work on opportunities for acquisitions across all ouroperations and remain committed to completing transactions at prices that willcontribute to long-term value creation for our shareholders. The acquisitionsand development capital projects announced today meet these criteria and aregeared towards building leadership positions across the building materialsindustry with the objective of delivering organic and acquisitive growth andincreasing shareholder value." The initiatives contained in this Development Strategy Update are as follows: • Europe Materials: three projects totalling euro 35 million Acquisition of 49% of a concrete paving producer together with a major capital investment in Poland and a major kiln conversion project in Ukraine. • Europe Products & Distribution: six deals totalling euro 47 million Geographical and product expansions in the Concrete, Clay and Building Products groups with the purchase of a leading natural stone supplier in Belgium, a facade/roofing systems business and a fencing company in The Netherlands, a brick-clad precast business in the United Kingdom, a glass roofing company in France and Belgium and a construction accessories company in Switzerland. • Americas Materials: nine deals totalling euro 41 million Four deals in Ohio (Central Division), comprising an initial entry into readymixed concrete, acquisition of an asphalt business, establishment of an asphalt joint venture and purchase of additional aggregate reserves. The West Division expanded its operations with five acquisitions in Idaho, Utah, Iowa and Wyoming. • Americas Products & Distribution: thirteen projects totalling euro 108 million Two acquisitions in the Architectural Products Group in the United States (Carolinas) and Canada combined with the construction of two large pallet paver plants in Illinois and Massachusetts and the automation of a roof tile production line in Arizona; acquisition by the Glass Group of a Toronto-based window and curtain wall manufacturer together with two capacity-enhancing projects in Minnesota and Texas; purchase of four interior products distributors and a distributor of roofing and siding products by the Distribution Group. Contact at Dublin 404 1000 (+353 1 404 1000) Liam O'Mahony Chief ExecutiveMyles Lee Finance DirectorMaeve Carton Group Controller Europe Materials: euro 35 million The Europe Materials Division acquired 49% of a concrete paving producer inPoland in the first six months of 2005 at a total cost of euro 5 million givingrise to goodwill of euro 2 million. Annual incremental sales amount to euro 5million. In addition, the Division has commenced two major capital projects, onein Poland and the other in Ukraine, at a total projected cost of euro 30million. Poland In February, Grupa Ozarow acquired an initial 49% stake in Bazaltex, a leadingconcrete paving producer based in the Silesia and Opole regions of southwesternPoland. The remaining shareholding will be purchased in two tranches, the firstlater in 2005 and the second in 2008 in line with a pre-agreed earn-out formula.The investment in Bazaltex extends CRH's position in the concrete pavingsegment. Grupa Ozarow has recently commenced a capital project to install a new kiln atits Trzuskawica lime plant located 200 kilometres south of Warsaw. The projectwill allow firing with both natural gas and solid fuels and has a scheduledcompletion date of January 2007. Ukraine Podilsky Cement has recently commenced a capital project to convert fromgas-fired kilns to coal and petcoke firing. With a targeted commissioning dateof January 2007, the investment will enable the realisation of substantial costsavings predominantly in fuel usage. Europe Products & Distribution: euro 47 million The Europe Products & Distribution Division completed six deals in three of itsproduct groups at a total cost of euro 47 million including goodwill of euro 17million. The annual incremental sales arising from these transactions amount toeuro 76 million. Concrete Products In June, the Concrete Products group acquired Hofman, a distributor of naturalstone products based in Belgium and focusing on the import and resale of newpavers together with the purchase, cleaning and resale of used pavers. Withannual sales of euro 10 million, the acquisition expands the group's productportfolio and strengthens its sales and procurement function in thisfast-growing segment. Clay Products In June, Clay Products Mainland Europe (CPME) purchased Leebo, a designer,manufacturer and installer of facade and roofing systems in The Netherlands withannual sales of euro 10 million. The company provides facade and roofingsolutions for new and existing commercial and industrial buildings andresidential developments to a broad end-user base. Leebo constitutes a strongentry point into this market for CPME and complements its expansion in moretraditional product-market combinations. In March, Ibstock acquired Manchester Brick & Precast, the market leader inbrick-clad precast arches in Great Britain with annual sales of euro 2 million.This acquisition presents a high level of strategic fit with Ibstock's Kevingtonsubsidiary, the market-leading fabricator of brick specials and brick-cladcomponents which was acquired in May 2001. Building Products In February, the Daylight & Ventilation division of the Building Products grouppurchased Laubeuf. With annual sales of euro 37 million, Laubeuf is engaged inthe engineering, manufacturing and installation of glass roofs in France andBelgium. The acquisition affords market leadership in the Benelux and France andgives rise to significant potential for cross-selling of products and technologyacross geographical boundaries. In June, the group's Construction Accessories division acquired Aschwanden, aleading producer of metal-based construction accessories in Switzerland withannual sales of euro 11 million. Aschwanden operates from one plant close toBern and carries an extensive product range. The combination of Aschwanden andCRH's existing construction accessories business (comprising Plakabeton andMavotrans) will enable exchange of construction accessories products between theindividual businesses within the platform. In May, the Fencing & Security division purchased Arfman, a specialised supplierof fauna and railway fencing systems in The Netherlands with annual sales ofeuro 6 million. This acquisition will strengthen Fencing & Security's marketleadership position in The Netherlands and also broaden its product range. Americas Materials: euro 41 million The Americas Materials Division completed nine deals at a combined cost of US$54million (euro 41 million) yielding annual incremental sales of US$58 million.Goodwill of US$11 million (euro 8 million) arose on these transactions. Central Division The Central Division completed four deals in Ohio through Shelly, its Ohio-basedsubsidiary, during the period. In January, the Division entered the readymixedconcrete market in northwest Ohio with the acquisition of Dielman, a leadingreadymixed concrete business in the greater Toledo area with annual volumes of0.2 million cubic yards. Dielman builds on Shelly's integrated position in Ohioand provides a platform for further growth in the readymixed concrete sector.Erie Blacktop Materials, an asphalt producer in northwest Ohio, was acquired inFebruary. The business has been fully integrated into existing operations. InApril, Shelly entered into a 50/50 joint venture in the Columbus metropolitanarea with a regional construction company. The joint venture, which operates asScioto Materials, combines the existing asphalt operations of both companies inthe area into one modern, efficient plant operating to the highest environmentalstandards. In June, Shelly purchased certain assets of C.E. Duff & Sons andentered into a long-term quarry lease in western Ohio with the same party. Thetransaction enables volume consolidation in the area with consequential scaleand production efficiency savings. West Division In March, the West Division completed four deals in Idaho, Utah and Iowa.Mountain Home Redi-Mix, a readymixed concrete producer and the largest aggregatesupplier in Mountain Home, Idaho, will operate as a bolt-on to existingoperations. Mountain Home Redi-Mix enjoys a solid aggregate position and is anexcellent fit between market areas already served by existing operations. FifeRock Products Company, an aggregates, asphalt, readymixed concrete andconstruction services company based in northern Utah, expands the Division'sreadymixed concrete market position in northern Utah and brings 35 million tonsof high-quality reserves. The acquisition of Peterson Companies, a 0.2 millioncubic yard readymixed concrete production and concrete paving company in DesMoines, Iowa, further enhances the Division's readymixed concrete position inthe Des Moines market. By way of expanding its reserve base in the central Iowaregion, the Division also purchased West Des Moines Sand Company. Wyoming Materials and Improvement, an asphalt, readymixed concrete andconstruction company based in northeast Wyoming, was acquired in April. Theacquisition, which adds readymixed concrete to the Division's product offeringsin Wyoming, has been integrated into existing operations in the state. Americas Products & Distribution: euro 108 million The Americas Products & Distribution Division completed a total of eightacquisitions during the first half of 2005 at a combined cost of US$94 million(euro 75 million) yielding annual incremental sales of US$145 million. Thesedeals generated goodwill of US$53 million (euro 43 million). In addition, theDivision has commenced five major capital projects during the period at a totalcost of US$41 million (euro 33 million). Architectural Products Group (APG) In January, APG purchased the assets of P&L Bark Nurseries, a leading supplierof bagged and bulk mulch and soil operating two manufacturing plants in theCarolinas. P&L Bark's primary customers are the national homecenter chains,national mass merchants and independent retailers. The deal follows theacquisition of Greenleaf Products in February 2004 and is part of APG's strategyto further increase penetration of the homecenter market in the United States. In February, APG purchased the hardscape assets of Central Precast, adiversified Canadian manufacturer of hardscape products, comprising pavers,segmental retaining walls and slabs. Central operates from two facilities inOttawa, on the border between Ontario and Quebec. In conjunction withreinforcing APG's current presence in Ottawa through its Permacon subsidiary,the acquisition consolidates APG's leadership in Quebec and gives rise to thesecond largest hardscape producer in Ontario on a combined basis. As part of its continuing development of an integrated manufacturing complex atChannahon, Illinois, APG has commenced the construction of a large pallet paverplant and stone bagging line at this location. Similarly, a project to install alarge pallet paver plant and block machine has been undertaken in Holbrook,Massachusetts. Both facilities will enhance APG's ability to service the UShomecenter, hardscapes and masonry markets. Together with the above, a capitalinvestment has been made to automate a production line in Casa Grande, Arizonawith the objective of expanding capacity and enhancing APG's competitiveness inthe Arizona concrete roof tile market. Glass Group Fulton Windows, a leading manufacturer of architectural-rated operable windowsand curtain wall in Toronto, Canada, was acquired by the Glass Group in June.Fulton's products, which complement the Glass Group's existing architecturalglass, storefront and structural glass wall products, are sold internationallythrough a diversified network of specialised dealers and installers. Theacquisition of Fulton is another step towards achieving the Glass Group'sobjective to become the leading provider of high-performance architectural glassand aluminium glazing systems. During the first half of 2005, the Glass Group commenced two major capitalexpenditure projects in Albertville, Minnesota and Houston, Texas. Both projectswill enable the locations to manufacture new generation soft-coatenergy-efficient glass products, as well as enhance efficiency, throughput andcapacity. Distribution Group As detailed below, the Distribution Group (Allied Building Products) hassignificantly expanded its interior products division with four acquisitionsduring the period giving rise to incremental annual sales of US$70 million.Interior products comprise gypsum wallboard, steel stud, acoustical ceiling tile/grid and accessories. Allied also completed one acquisition with annual salesof US$20 million in its traditional roofing and siding sector. In January, Allied purchased Bryant Building Products, a single-branch interiorproducts distributor in Ohio. Also in January, Allied acquired Dashco, a NewJersey-based two-branch interior products distributor. Dashco is the largestdistributor of Armstrong acoustical ceiling tile in northern New Jersey. InJune, Allied acquired Global Building Supply Company. With three branches in theWashington D.C. area, Global services both commercial and residential customers.RME Construction & Supply Co., a single-branch interior products distributor wasalso acquired in June. Based on the Hawaiian island of Maui, RME represents anattractive add-on for G.W. Killebrew which is based in Honolulu, the principalcity of the Hawaiian Islands, and was acquired in January 2004. The acquisition of Norge Builders was completed by Allied in early June. Norgeis a distributor of siding, roofing, windows and garage doors in northern NewJersey. Operating from four branches, Norge offers opportunities for Allied inthe garage doors product line while increasing Allied's presence in its coreroofing and siding markets. ** Ends ** CRH plc, Belgard Castle, Clondalkin, Dublin 22, Ireland TELEPHONE +353.1.404 1000 FAX +353.1.4041007 E-MAIL [email protected] WEBSITE www.crh.com Registered Office, 42 Fitzwilliam Square, Dublin 2, Ireland This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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