4th Jan 2006 07:00
CRH PLC04 January 2006 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 4 January 2006 CRH ANNOUNCES FURTHER SECOND HALF DEVELOPMENT INITIATIVES TOTALLING EURO 575 MILLION TO GIVE FULL YEAR DEVELOPMENT TOTAL OF APPROXIMATELY EURO 1.45 BILLION CRH plc, the international building materials group, today announces 34development initiatives totalling euro 575 million (including capitalexpenditure of euro 19 million on three large capital projects) undertakenduring the second half of 2005. These initiatives are in addition to the threeMaterials transactions in the United States totalling euro 344 million announcedon 1 November 2005 and the acquisition of a 26.3% stake in Corporacion Unilandannounced on 30 December 2005 for approximately euro 300 million. These bringtotal development spend for the second half of 2005 to over euro 1.2 billion. With this strong pick-up in the second half of the year, development expenditurefor the full year, including the first half spend of euro 231 million announcedon 5 July 2005, amounts to approximately euro 1.45 billion. Commenting on these developments, Liam O'Mahony, CRH Chief Executive, said: "We are very pleased that the level of completed transactions has increasedduring recent months following a relatively slow pace of spend in the first sixmonths of 2005. As previously indicated, we continue to work on opportunitiesfor acquisitions across all our operations and remain committed to completingtransactions at prices that will contribute to long-term value creation for ourshareholders." • Europe Materials - 4 deals for euro 15 million Acquisition of an additional 31% in a concrete paving producer and the purchaseof an aerated concrete block producer in Poland , and acquisition of twoconcrete products businesses in Finland . • Europe Products & Distribution - 9 deals for euro 358 million Three acquisitions were completed by the Concrete Products group in Belgium ,France and Denmark. The Clay Products group acquired one business in Poland.The Building Products group acquired a leading pan-European producer ofconstruction accessories. The Distribution group was expanded with the additionof four builders merchanting businesses in Switzerland , Austria and Germany. • Americas Materials: 8 deals totalling euro 31 million Five acquisitions in the West region, together with one acquisition in each ofthe Central, New York/New Jersey and New England regions. • Americas Products & Distribution: 10 deals & 3 projects totalling euro 171 million Four acquisitions in the Architectural Products Group, combined with theconstruction of a stone bagging facility in New Jersey and a block plant inArizona. Three deals by the Precast Group in Arizona, Kansas and West Virginia,together with the relocation of an operation in California . Threeacquisitions by the Distribution Group adding a total of 14 branches in Utah,Michigan, Ohio and Florida. Contact at Dublin 404 1000 (+353 1 404 1000)Liam O'Mahony Chief ExecutiveMyles Lee Finance DirectorEimear O'Flynn Head of Investor RelationsMaeve Carton Group Controller Europe Materials: euro 15 million In addition to the investment of approximately euro 300 million in Spanishcement producer Corporacion Uniland announced on 30 December 2005, the EuropeMaterials Division completed four transactions during the second half of 2005,at a total cost of euro 15 million. Annual incremental sales amount to euro 20million. Poland In July, CRH acquired an additional 31% stake in Bazaltex, a leading concretepaving producer based in the Silesia and Opole regions of south-western Poland.This transaction brings CRH's share in Bazaltex to 80%, following theacquisition of an initial 49% stake in the business in February 2005. Theremaining shareholding is expected to be purchased in 2008 in line with apre-agreed earn-out formula. The investment in Bazaltex extends CRH's positionin the concrete paving segment. Also in July, CRH extended its aerated concrete activities in Poland with theacquisition of Prefabet Niegocin, a producer of aerated concrete block based inthe Warminsko-Mazurskie voivodship in the northeast of the country. Finland In late December, Lohja Rudus completed two acquisitions, with total annualsales of euro 13 million, which strengthen its existing position in concreteproducts in Finland . Elpotek, which has a production facility at Kotka, 150kmeast of Helsinki, is a producer of vertical and horizontal precast concreteelements which have preinstalled pipes for transporting sewage, water and airconditioning and other services. Skanska Betoni is a manufacturer of concretepiles, sound barriers, road wall panels and housing panels with one location inNurmijarvi, close to Helsinki . This acquisition will result in increasedproduction and transport efficiencies in the existing Rudus/Abetoni concretepile business in addition to providing access to new products. Europe Products & Distribution: euro 358 million The Europe Products & Distribution Division completed nine acquisitions in thesecond half of 2005 at a total cost of euro 358 million. This includes foursignificant transactions, in the Concrete Products (Stradal), Building Products(Reuss-Seifert) and Distribution (Quester and Bauking) groups, together withfive smaller deals. The annual incremental sales arising from these transactionsamount to euro 784 million. Concrete Products In July, the Concrete Products group acquired Marmorith, a manufacturer ofprefabricated structural concrete elements (shuttering slabs, load-bearingwalls) in Belgium serving the non-residential sector. With annual sales of euro18 million, Marmorith operates from a single production plant in Houthalen innorthern Belgium ; 85% of its sales are generated in Belgium while exports tothe Netherlands account for the remaining 15%. The deal strengthens CRH'sposition in the Belgian floor market and expands its product assortment in thereinforced structural sector. In August, the group acquired Stradal in France . With annual sales of euro 173million, Stradal operates 24 factories across the country producing landscape,utility and infrastructure products. It is also a 30% shareholder in ECPC, anEgyptian concrete pipe and water treatment system producer. Stradal gives CRHthe opportunity to build a leadership position in concrete products in Franceand to realise synergies across its expanded concrete operations in France. In December, the group acquired RBR, the second largest paving manufacturer inDenmark. RBR is a highly efficient operator with a significant market positionin the west of the country. It operates from three production locations and hasannual sales of euro 14 million. The deal represents CRH's first architecturalconcrete products investment in Denmark. Clay Products In July, the Clay Products group acquired Cerpol, a leading privately-ownedproducer of clay blocks in Poland with annual sales of euro 6 million. With oneproduction site located in Kozlowice, close to the key markets of Silesia,Opole and Wroclaw , Cerpol provides CRH with the opportunity to broaden itsproduct range into clay construction blocks and to build its own platform forgrowth in the market. Building Products In October, the Construction Accessories division acquired Reuss-Seifert Group,a leading European producer of construction accessories (plastic, metal andconcrete spacers and other accessories) with annual sales of euro 55 million.Reuss-Seifert (now renamed Syncotec) operates three plants and one distributioncentre in Germany , together with production plants in France and Poland andsales offices in Poland and the Czech Republic. This acquisition makes CRH themarket leader in Central Europe ( Germany , Poland and the Czech Republic ) inspacers and plastic formwork accessories and also provides opportunities for thedistribution of our existing Plakabeton and Aschwanden products in Germany andeastern Europe through the Syncotec sales network. Annualised sales for the CRHConstruction Accessories group following this deal are approximately euro 150million. Distribution In July, the Distribution group acquired Fr. Schneider, a Swiss buildersmerchant with one location operating in the Bern region. In November, the groupacquired Baucasch, a general builders merchant with two branches in the Surselvavalley in the southeast of Switzerland . These two acquisitions, with combinedannual sales of approximately euro 14 million, are an excellent fit with CRH'sexisting 32-branch BauBedarf builders merchanting operations and supportBauBedarf's strategy of strengthening its market position in the German-speakingpart of Switzerland. The acquisition by the Distribution group of Quester, the leading nationwideAustrian builders merchant with 32 locations (including a central warehouse forceramics), was completed in October. Quester's sales, which amount toapproximately euro 250 million annually, span three product categories: generalbuilding, dry construction materials and ceramics. The acquisition representsan excellent platform for further growth in the relatively fragmented Austrianmarket. In December, the Distribution group acquired a 47.8% joint venture interest inBauking, a builders merchant and DIY operator with 108 locations primarily innorthern Germany . With annual sales of euro 531 million (CRH share euro 254million), Bauking is the clear market leader in the region, and has performedwell despite difficult market conditions in Germany. This deal gives CRHDistribution, which is already one of the largest operators in the Netherlands,access to the German builders merchanting and DIY markets. Americas Materials: euro 31 million In addition to the acquisitions of the Mountain Companies and Southern MinnesotaConstruction and the investment in Bizzack at a total combined cost of euro 344million, which were announced on 1 November 2005, the Americas MaterialsDivision completed eight bolt-on acquisitions in the second half of 2005 at acombined cost of US$38 million (euro 31 million). These eight acquisitions,which will add annual incremental sales of US$44 million, bring total secondhalf development spend for the Division to euro 375 million. New York/New Jersey In July, the Americas Materials Division acquired the readymixed concrete assetsof Tri-Cities Aggregate located in the greater Albany area of upstate New York.With annual sales of US$2 million, Tri-Cities is a solid bolt-on to existingoperations in the area. New England Blue Rock Industries, an integrated aggregates, asphalt and construction companybased near Portland , Maine with annual sales of US$20 million, was acquired inmid-December. The deal provides valuable reserves to improve the verticalintegration of our existing operations and gives greater exposure to the privateand commercial sectors in the Portland area. Central In November, the Division acquired the trucking assets of the Stansley Group(annual sales of US$2 million) to enhance the aggregate transportationcapabilities of the Division's existing vertically integrated business in theToledo, Ohio area. West During the second half of 2005, the Americas Materials Division completed atotal of five bolt-on acquisitions in its West region which strengthen andcomplement its existing activities and provide incremental annual sales of US$20million to this regional group. Pave & Seal, a small paving and construction services company located in Oregon, was acquired in July. This acquisition expands the Division's aggregates,asphalt and ready-mix concrete operations into the attractive and fast-growingOregon residential and commercial paving market. In August, two small deals were completed in Iowa : KP Materials, an aggregatesbusiness in northwest Iowa which serves both this region and parts ofsouth-central Minnesota, and Reilly Recycling, a concrete and asphalt recyclingbusiness in Des Moines. A third business, Kruse Paving, an asphalt pavingbusiness with gravel resources in northwest Iowa and southwest Minnesota, wasadded in September. Also in September, the West group acquired Coppola Concrete Supply, a readymixedconcrete supplier in New Mexico. Coppola is being integrated with the Westgroup's existing New Mexico aggregates and readymixed concrete operations whichare located near Albuquerque. Americas Products & Distribution: euro 171 million The Americas Products & Distribution Division completed a total of 10acquisitions in the second half of 2005 at a combined cost of US$182 million(euro 152 million) yielding annual incremental sales of US$279 million. Inaddition, the Division has commenced three major capital projects at a combinedcost of US$22 million (euro 19 million). Precast Group In July, the Precast Group acquired Contractors/Engineers Supply (CES), aconcrete utility box manufacturer and distributor of water and irrigationsupplies. CES, which has annual sales of US$7 million from two locations inPhoenix and Tucson , has been a leader in the Arizona construction productsmarket for 30 years and is the only Arizona-based manufacturer of concreteutility boxes. The acquisition is an excellent add-on for the Precast Group'sWest division, strengthening its position in the attractive and fast-growingArizona market. The acquisition of Vanguard Products Corp. was also completed in July. Vanguard,a manufacturer of precast concrete manhole and drainage products and concretepipe in Kansas , has annual sales of US$8 million from two locations in Topeka.Vanguard has been a leader in the Kansas market for nearly 40 years, and thisacquisition adds a new state to the Precast Group's existing operations in theMid-western region. Packaged Systems, a manufacturer of precast concrete pump-stations and manholesin West Virginia , was acquired in November. With annual sales of US$4 millionand a high value-added product range which is produced at its facility nearCharleston, West Virginia, the company strengthens the Precast Group'spresence in this region of the United States. In August, the Precast Group decided to replace and relocate its Christy Fremontfacility to a new site in Madera, California. This move facilitates futuredevelopment opportunities for the Precast West division. Architectural Products Group (APG) In September, APG purchased certain assets of S.T. Wooten, a concrete blockmanufacturer in North Carolina (NC). S.T. Wooten operates from one facility inWilson, NC, and generates annual sales of US$4 million. The acquisition bringsadditional manufacturing capacity to our Adams Products companies and willsupport their growth in eastern NC through increasing market share withlightweight block and resale items. Also in September, APG acquired selected assets in Atlanta, Georgia of EarthPak, a producer of bagged soil and mulch and decorative stone with annual salesof US$9 million. This was followed in October by the purchase of Jolly Gardener,one of the leading producers of bagged soil and mulch products in the UnitedStates with annual sales of US$119 million. Jolly Gardener operates ten plantsin seven east coast states extending from Florida to Maine. Both these dealsreinforce APG's retail strategy of achieving national coverage in DIY lawn andgarden and building products through product bundling for both the largehomecenter chains and independent retailers. In November, APG purchased Arkalite Corporation, a lightweight aggregatesproducer in Arkansas with annual sales of US$11 million. The acquisition is anatural fit with our existing Big River business which is a leading producer oflightweight aggregates in the United States with production facilities inAlabama and Louisiana. During the period, APG also commenced the construction of an automatic stonebagging facility at the Materials Division's site in Mount Hope, New Jersey.This development allows APG's Oldcastle Stone Products group to enhance itsservice in the New York/New Jersey markets. In October, APG started theconstruction of a block plant in Phoenix, Arizona further increasing productioncapacity to service strong customer demand in the Phoenix market. Distribution Group The acquisition of Interstate Roofing Supply was completed by the DistributionGroup (Allied Building Products) in early November. Interstate is a two-branchdistributor of roofing products in north-central Utah and has annual sales ofUS$13 million. The acquisition builds on Allied's existing branch in Salt LakeCity which specialises in serving Allied's core roofing and siding market. In early December, Allied acquired Astro Building Products, a roofing, sidingand window distributor, with two locations in Detroit, Michigan and one inToledo, Ohio. With annual sales of US$25 million, Astro adds critical mass inthe important metropolitan Detroit market where Allied already has three roofingand siding branches and one branch specialising in interior products. As part of the expansion of Allied's interior products division, the acquisitionof Atlantic Building Materials was completed in late December. With ninebranches in central Florida and annual sales of US$90 million, Atlantic willgive Allied a strong presence in the Florida interior products market and willcomplement Allied's existing five-branch roofing and siding presence in Florida. * * * * * CRH plc, Belgard Castle , Clondalkin, Dublin 22, Ireland TELEPHONE +353.1.4041000 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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