OREANDA-NEWS. 

Key Points

  • Good profit growth
  • Enhanced portfolio through M&A
  • Strong cash generation; de-leveraging accelerated
  • Margins and returns ahead

Financial Highlights

  • Sales of €23.6 billion, 25% ahead of 2014; continuing operations (see page 29) up 17%
  • EBITDA up 35% to €2.2 billion, ahead of November guidance; continuing operations up 33%
  • Cash inflow from operations up 47% to €1.3 billion; year-end net debt of €6.6 billion
  • Dividend per share maintained at 62.5c, covered 1.4 times

Strategic Highlights

  • Strengthening market positions through focused portfolio management
  • Delivering value through capital allocation and reallocation at attractive multiples
  • Acquisitions and investments of almost €8 billion; transaction/one-off costs of €0.2 billion
  • Divestment and disposal proceeds of circa €1.0 billion; cumulative proceeds from divestment programme since 2014 of €1.4 billion

Albert Manifold, Chief Executive, said today:

“As a result of good performance from our heritage businesses and contributions from acquisitions, 2015 was a year of significant profit growth for CRH. Strong cash generation resulted in our year-end debt metrics being ahead of target, and we are well on track to restoring these metrics to normalised levels during 2016. Recently there has been some uncertainty about the pace of global growth. Our focus remains on consolidating and building upon the gains made in 2015, and against this backdrop we believe 2016 will be a year of continued growth for the Group.”

OVERVIEW

2015 was a year of growth for CRH, with continued positive momentum in the Americas and more mixed market conditions in Europe. With the benefit of more normal weather patterns in the Americas at the start of the year compared with 2014 and the favourable conditions through to the end of the year in all markets, together with currency translation benefits, sales of €23.6 billion for the period were 25% ahead of 2014. The businesses acquired from Lafarge and Holcim (the “LH Assets” – see page 11) made a strong contribution and post-acquisition sales and EBITDA were ahead of expectations.

On a continuing operations basis, excluding the impact of divestments and of the LH Assets and with the benefit of positive currency impacts, sales were 17% higher than 2014 (see page 29). An increase of 30% in the Americas reflected the strength of the US dollar versus the euro and the continued positive momentum in construction markets, while sales from continuing operations in Europe were 3% ahead of last year. Profits and margins from continuing operations increased in all six segments with good operating leverage also delivered. EBITDA from continuing operations in the Americas was 51% ahead of 2014, with our continuing European operations delivering EBITDA growth of 4%.

The LH Assets delivered profits ahead of expectations in the post-acquisition period, with reported EBITDA of €171 million stated after charging transaction/one-off costs of €197 million. Including this contribution, and the impact of divestments, EBITDA for the year amounted to €2,219 million, a 35% increase on 2014 and ahead of the guidance provided in the Interim Management Statement on 19 November 2015.

Depreciation and amortisation charges in 2015 amounted to €898 million (2014: €675 million). In addition, an impairment charge of €44 million (2014: €49 million) was recognised in 2015 in respect of the carrying value of certain property, plant and equipment, intangible and financial assets.

Divestments and asset disposals during the year generated total profit on disposals of €101 million, an increase of €24 million compared with 2014.

The Group’s share of profits from equity accounted entities at €44 million (2014: €55 million) reflected the disposal of certain investments late in 2014 and in 2015, in addition to a mixed outturn across our markets.

With net finance costs of €389 million (2014: €288 million), the Group reported profit before tax of €1,033 million in 2015 (2014: €761 million). Earnings per share (EPS) for the period were 13% higher than last year at 89.1c (2014: 78.9c); the impact of higher profits was partly offset by the increase in weighted average number of shares in issue to 812.3 million (2014: 737.6 million) following the placing of approximately 74 million shares in early February 2015. The EPS of 89.1c includes the impact of the €197 million transaction/one-off costs related to the acquisition of the LH Assets; without these costs EPS would have been 111.8c.

DIVIDEND

The Board is recommending a final dividend of 44c per share, in line with the final dividend for 2014. This gives a total dividend of 62.5c for the year, maintained at last year's level and covered 1.4 times by the EPS of 89.1c for 2015. It is proposed to pay the final dividend on 6 May 2016 to shareholders registered at the close of business on 11 March 2016. A scrip dividend alternative will be offered to shareholders.

FINANCE

Total net finance costs rose to €389 million (2014: €288 million), reflecting the higher average debt during the year together with a charge of €38 million for the early redemption of a portion of the US dollar bonds maturing in 2016. The early redemption results in overall net interest savings for the Group in 2015 and 2016. Finance costs for the year also included discount unwinding and pension-related financial expenses of €56 million (2014: €42 million); excluding these one-off and non-cash expenses, net debt-related interest amounted to €295 million (2014: €246 million).

The tax charge of €304 million for the year (2014: €177 million) equated to an effective tax rate (tax charge as a % of pre-tax profit) of 29.4%, compared with 23.2% in 2014. The effective tax rate is influenced by the one-off charges related to the LH Assets transaction that are substantially non tax deductible; excluding these, the underlying effective tax rate was 25.8%.

Reflecting our continued strong focus on cash management, the Group generated operating cash flow of €1.3 billion for the year (2014: €0.9 billion) and year-end net debt, at €6.6 billion, was below the guidance provided in November. Net debt to EBITDA was 3.0x (2014: 1.5x) and, based on net debt-related interest costs, EBITDA/interest cover for 2015 was 7.5x (2014: 6.7x). Given the level of proceeds already realised to date under our divestment programme, and with the Group’s strong track record in converting a significant proportion of its EBITDA into operating cash flow, we are on track to deliver on our commitment to restoring our debt metrics to normalised levels in 2016.

The Group took advantage of the low interest rate environment in 2015 to raise the equivalent of over €2.5 billion in the debt capital markets during the year. In May, a total of US$1.75 billion dollar bonds were issued, comprising a US$1.25 billion 10-year bond at a coupon rate of 3.875% and a US$0.5 billion 30-year bond at a coupon rate of 5.125%. Part of the proceeds from these US dollar issues was used to make an early redemption of US$0.97 billion of the total US$1.6 billion bonds due in 2016. In December, a €600 million 8-year bond was issued with a coupon of 1.875% along with a 14-year GB£400 million bond with a coupon of 4.125%.

The bond issues reflect CRH’s commitment to prudent management of our debt and the timing of the related maturities and also to maintaining an investment grade credit rating.

The Group ended 2015 in a very strong financial position with total liquidity at end 2015 of €5.6 billion comprising €2.5 billion of cash and cash equivalents on hand and €3.1 billion of undrawn committed facilities, €2.8 billion of which do not mature until 2020.