5th Jan 2005 07:00
CRH PLC05 January 2005 Development Strategy Update 5 January 2005 CRH ANNOUNCES FURTHER DEVELOPMENT INITIATIVES TOTALLING EURO 309 MILLION CRH plc, the international building materials group, today announces 25development initiatives totalling euro 309 million (including capitalexpenditure of euro 66 million on six large projects) undertaken during thesecond half of 2004. These initiatives bring total development spend for 2004 toslightly over euro 1 billion. Commenting on these developments, Liam O'Mahony, CRH Chief Executive, said: "2004 has been another strong year for CRH from a development perspective withtotal spend exceeding euro 1 billion. The acquisitions and development capitalprojects announced today are geared towards building leadership positions acrossthe building materials industry with the objective of delivering organic andacquisitive growth and increasing shareholder value." The principal initiatives contained in this Development Strategy Update are asfollows: Europe Materials : three projects totalling euro 19 million Acquisition of an aggregates business in Finland, purchase of a producer ofaerated concrete in Poland and a major capital project in Switzerland. Europe Products & Distribution : six deals totalling euro 109 million Buyout of a concrete products business in the Netherlands and purchase of aleading manufacturer of concrete products in Belgium; acquisition of aninsulation business in the United Kingdom and a metal-based constructionaccessories supplier in the Netherlands; significant expansion of theDistribution Group's builders merchanting activities in the Netherlands togetherwith further investment in a regional builders merchant in France. Americas Materials : six projects totalling euro 111 million The New York/New Jersey Division acquired a major quarry in northeastern NewJersey and a sand and gravel pit in New York State. The West Division made aninitial entry into southern Oregon and expanded its operations in northwesternIowa. The Central Division bought out a joint venture in Ohio and initiated acapital project to greenfield a quarry and manufacturing facilities inPennsylvania. Americas Products & Distribution : ten projects totalling euro 70 million Two acquisitions in the Architectural Products Group in Florida and Alabamacombined with the construction of three large pallet paver plants in Arizona,Pennsylvania and Maryland and the relocation of existing activities in Illinois;purchase by the Precast Group of two businesses serving the states of Texas,Arkansas, Georgia and South Carolina; acquisition by the Glass Group of a NewYork-based glass fabricator; purchase of a distributor of roofing and sidingproducts 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 19 million The Europe Materials Division acquired two businesses in Finland and Poland inthe latter six months of 2004 at a total cost of euro 4 million. Annualincremental sales amount to euro 4 million. In addition, the Division hascommenced a major capital project in Switzerland at a total projected cost ofeuro 15 million. Finland With the objective of enhancing production efficiency and realising medium-termsavings in transportation costs, Lohja Rudus' aggregates division has recentlyimplemented a strategy to consolidate its quarry network in the vicinity ofHelsinki. In August, in the first phase of this strategy, Lohja Rudus purchasedthe equity of Jersanmaki providing access to circa 1.1 million tonnes of owned,high-quality aggregate reserves. Poland In November, Grupa Ozarow extended its presence in the aerated concrete sectorin Poland through the acquisition of Prebet Zelislawice. Aerated concrete is theleading wall material in Poland and is a major downstream consumer of cement andlime products. The company has annual sales of PLN 9 million and is located inthe province of Silesia in southwestern Poland. Switzerland Jura Cement has recently commenced a phased capital project to expand clinkerproduction capacity at its Wildegg facility in the German-speaking region ofSwitzerland. With a target completion date of March 2006, the project willfacilitate increased usage of alternative fuels yielding significant savings inoperating costs. Europe Products & Distribution : euro 109 million The Europe Products & Distribution Division completed six deals in four of itsproduct groups at a total cost of euro 109 million including goodwill of euro 6million. The annual incremental sales arising from these transactions amount toeuro 254 million. Concrete Products Group In October, the Concrete Products Group acquired the remaining 50% interest inKellen Concrete Products giving rise to incremental annual sales of euro 12million. Full ownership of the Kellen business strengthens CRH's market positionin the Netherlands through the combination of its product portfolio with that ofStruyk Verwo and also facilitates the realisation of savings through optimisingcapacity utilisation. In December, the Concrete Products Group acquired Klaps, a leading manufacturerof concrete paving, sewerage and water treatment products with annual sales ofeuro 45 million and a total of five production locations in northern Belgiumadjacent to the Dutch border. Together with synergies stemming from moreefficient allocation of production across CRH's expanded plant network, theacquisition significantly strengthens the Concrete Products Group's existingbusinesses in Belgium creating leadership positions in many of its marketsectors and providing a strong distribution channel for further penetration ofthe garden products segment in the Netherlands. Insulation Group The Insulation Group expanded its manufacturing presence in the United Kingdomin November through the acquisition of the polyurethane/polyisocyanurate (PUR/PIR) activities of Icopal. With annual sales of euro 16 million, the dealprovides additional manufacturing capacity to take advantage of anticipatedgrowth in the UK insulation market. Building Products Group In July, the Building Products Group purchased Mavotrans, a supplier ofmetal-based construction accessories in the Netherlands with annual sales ofeuro 8 million. Mavotrans will be fully integrated into Plakabeton, which wasacquired in April 2003 as a platform for entry into the construction accessoriesbusiness in Europe. In addition to the realisation of cost savings, the dealprovides clear leadership in the Dutch market and enhances Plakabeton's productportfolio both in the Netherlands and in its other operations in Belgium, Franceand Spain. Distribution Group In December, the Distribution Group purchased NCD Builders Merchants. The dealalso involved the purchase of the residual 50% stake in Gamma Sneek which hadoriginally been acquired as part of the Cementbouw transaction in October 2003.The aggregate incremental annual sales amount to euro 173 million. NCD's networkof 17 stores in the Netherlands enhances market leadership and provides coveragein regions where the Distribution Group's builders merchanting division has nothistorically enjoyed a strong presence. The joint venture company established by CRH (45% stake) and SAMSE (55%) hasacquired the remaining 7.8% of the share capital of G. Doras, a regionalbuilders merchant operating a total of 45 specialist and generalist buildersmerchanting outlets in the Burgundy and Franche Comte regions of France. Aspreviously announced, the joint venture purchased an initial 34.7% stake inDecember 2003 and augmented its shareholding to 92.2% in the first half of 2004. Americas Materials : euro 111 million The Americas Materials Division continued its development programme through thecompletion of five deals at a combined cost of US$124 million (euro 100 million)yielding annual incremental sales of US$67 million. Goodwill of US$4 million(euro 3 million) arose on these transactions. The Division has also commenced amajor capital project at a cost of US$14 million (euro 11 million). New York/New Jersey Division In July, the Materials Group completed the acquisition of Passaic Crushed Stoneand Gallo Asphalt (collectively "Gallo"), an aggregates and asphalt businessoperating in northeastern New Jersey with annual volumes of 1.4 million tons ofaggregates and 0.3 million tons of asphalt. With owned and fully permittedaggregate reserves totalling 300 million tons, Gallo's quarry at Pompton Lakesprovides strong and sustainable long-term reserves for Tilcon in the New Jerseymarket. The transaction is an ideal fit with Tilcon's activities in New Jerseyand should generate significant benefits from consolidation of existing quarriesand savings in transportation and other operating costs. In August, Callanan Industries purchased Amenia Sand & Gravel, an aggregates,asphalt and readymixed concrete producer located in southeastern New York State.The integration of Amenia into Callanan enables expansion of its market reach tothe east and southeast of its existing Kingston location. Western Division In October, Oldcastle Materials acquired an initial position in the materialsmarket in southern Oregon, adjacent to the border with California, through thepurchase of Klamath Pacific, a producer of aggregates, asphalt and readymixedconcrete. With total permitted aggregate reserves of 190 million tons locatedwithin a 40-mile radius of its headquarters in Klamath Falls, the acquisitionprovides a strong base from which to undertake future development activity in anattractive region. In December, the Materials Group acquired Rohlin Construction Company, anaggregate, asphalt and paving contractor based in northwestern Iowa. Throughsignificant geographical overlap with existing aggregate and readymixed concreteactivities, the deal strengthens Oldcastle's market presence and enables theDivision to pursue growth opportunities in highway construction in western Iowa. Central Division Following the purchase of an initial 50% interest in a joint venture with theHeritage Group in July 2001, Oldcastle Materials acquired the residualshareholding in November 2004 giving rise to full ownership of a dolomiticlimestone quarry in the vicinity of Toledo in northwest Ohio with totalpermitted reserves exceeding 200 million tons. The buyout of the joint venturepartner enables the Materials Group to benefit from the consolidation andoptimisation of aggregate volumes across its network of quarries in northwestOhio which were acquired through the S.E. Johnson transaction in May 2003. In order to address capacity constraints at existing quarries in Pennsylvania(PA), Oldcastle Materials has initiated a project to develop a greenfield sitelocated near Harrisburg, PA with in excess of 200 million tons of high-qualitypermitted stone reserves. On completion of site development work and theinstallation of aggregate processing facilities in the near future, thesubsequent phase will focus on erection of the asphalt and readymixed concreteplants. At a total cost of US$14 million (euro 11 million), the new quarry willenable the Materials Group to take full advantage of the promising marketoutlook in the surrounding area. Americas Products & Distribution : euro 70 million The Americas Products & Distribution Division completed a total of sixacquisitions during the second half of 2004 at a combined cost of US$37 million(euro 30 million) yielding annual incremental sales of US$74 million. Thesedeals generated goodwill of US$17 million (euro 14 million). In addition, theArchitectural Products Group has undertaken four major capital projects inArizona (AZ), Pennsylvania (PA), Maryland (MD) and Illinois (IL) at a combinedcost of US$50 million (euro 40 million). Architectural Products Group (APG) In December, APG purchased Anchor Block of Florida, a leading manufacturer ofsegmental retaining walls (SRWs) and architectural masonry with two plants ineastern and southwestern Florida. With annual sales of US$12 million and anexclusive licence to produce Anchor retaining wall products in the state, thedeal complements APG's existing presence in retail garden walls (through MattStone Company which was acquired in June 2003) and enables significant expansionof its sales to the fast-growing commercial SRW sector. In December, APG purchased Creative Surfaces, a single-site fabricator of solidsurface, granite and engineered stone countertops serving the Birmingham,Alabama market with annual sales of US$3 million. The transaction represents thefirst add-on to Custom Surfaces, 80% of which was acquired in March 2004. Theacquisition extends Custom's regional presence from its existing base in theadjacent states of Georgia and South Carolina and enables it to pursueopportunities in the high-growth markets of the southeastern United States. As part of its continuing national capital expenditure programme to service thefast-growing US homecenter and hardscape markets in the United States, APG hasbegun construction of three large pallet paver plants in Phoenix, AZ, Easton, PAand Crofton, MD. It is envisaged that commissioning of these facilities, whichhave a combined cost of US$38 million (euro 31 million), will take place inFebruary, March and May 2005 respectively. Together with savings in terms offreight and other operating costs, the plants alleviate capacity constraints atAPG's existing facilities in their respective regions thus streamlininglogistics, enhancing operational efficiency and enabling increased marketpenetration. APG has recently commenced a major project to consolidate, upgrade and relocatethe grinding and glazing operations of Trenwyth Industries in South Beloit, ILto an 87-acre site in Channahon, IL and to greenfield a block machine at thislocation. The total cost of the project, which is scheduled for completion inmid-2005 and is the first component of a planned integrated manufacturingcomplex at Channahon, is US$12 million (euro 9 million). The relocation ofTrenwyth's activities will remedy an existing capacity shortfall and will leadto savings in handling and transportation costs. The new block machine willenable APG to capitalise on growing demand in its homecenter and hardscapebusiness sectors. Precast Group Following three separate purchases of Newbasis assets in California, Georgia andFlorida in recent years, the Precast Group acquired Newbasis Central in August.With annual sales of US$18 million, Newbasis Central is a leading manufacturerof utility and drainage products in the important Texas market. Also in August, the Precast Group's Southeast Division expanded its geographicalfootprint through the acquisition of Mega Cast, a manufacturer of precastconcrete drainage products located near Savannah, Georgia with annual sales ofUS$2 million. The transaction provides a platform for the introduction of boxculvert, utility and other Precast Group products into the southeastern Georgiaand South Carolina markets and facilitates the further development of drainageproducts at the Jacksonville facility in Florida. Glass Group In July, the Glass Group acquired Floral Glass, a market-leading New York-basedglass fabricator performing tempering, insulating, laminating andcustom-fabrication activities at three strategically located manufacturingfacilities in New York State, Connecticut and New Jersey. With annual sales ofUS$30 million, Floral significantly strengthens the Glass Group's presence inthe important Tri-state market (centred on New York City and including New York,Connecticut and New Jersey) and provides substantial opportunity for realisingcost reductions from best practice initiatives and purchasing scale. Distribution Group In August, Allied Building Products continued its strategy of increasing itspresence in major metropolitan areas through the purchase of Metro RoofingDistributors, a two-branch distributor of windows, siding and roofing productsin Boston, Massachusetts. With annual sales of US$9 million, the acquisitionprovides a good entry point into the Boston market which exhibitshigher-than-average replacement activity stemming from harsh winter weather. ** Ends ** CRH plc, Belgard Castle, Clondalkin, Dublin 22, Ireland TELEPHONE +353.1.4041000 FAX +353.1.404 1007 E-MAIL [email protected] WEBSITE www.crh.com Registered Office, 42 FitzwilliamSquare, Dublin 2, Ireland This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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