CRH(CRH) - 2019 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Group sales for Q1 2019 were 7% ahead on a like-for-like basis compared to the previous year, driven by good underlying demand, favorable weather, and pricing progress [5][19] - EBITDA expectations for the first half of 2019 are projected to exceed €1.5 billion, which is over €400 million ahead of the previous year [19] Business Line Data and Key Metrics Changes - Americas Materials Division: Like-for-like sales increased by 4% in Q1 2019, benefiting from positive momentum in infrastructure, residential, and non-residential markets [7] - Europe Materials Division: Like-for-like sales increased by 12% year-over-year, with strong cement volume growth in countries like France, Ireland, and Poland [9][10] - Building Products Division: Like-for-like sales were 5% ahead of 2018, supported by positive demand in both Europe and North America [12][13] Market Data and Key Metrics Changes - In the U.S. housing market, growth is expected to be around 2% to 3%, with good sentiment among homebuilders and low inventory levels [41] - The political situation in the UK continues to weigh on markets, but milder weather contributed to improved volumes in Q1 2019 [9][10] Company Strategy and Development Direction - The company is focused on integrating the Ash Grove Cement acquisition and improving profitability and efficiency across its businesses [37][38] - A strategic review of the European Distribution business is ongoing, with potential divestments being considered [15][17] Management's Comments on Operating Environment and Future Outlook - Management expects a moderation of growth in Europe after a strong Q1, with pricing increases providing some upside [23][25] - The company anticipates continued positive underlying demand momentum for the rest of 2019 [13][19] Other Important Information - The company has completed 16 bolt-on acquisitions for a total consideration of €200 million in the year-to-date [14] - A further tranche of up to €350 million for the share buyback program is proposed to be completed before interim results in August [5][18] Q&A Session Summary Question: Guidance on European profit growth and potential acceleration in the Americas - Management indicated that while European profit growth may decelerate, the Americas could see an acceleration due to easier comparatives in the second half of 2018 [22][24] Question: Energy costs and carbon rights - Energy costs are expected to increase, with CO2 costs anticipated to rise by around €10 million in 2019 [30][31] Question: Capital allocation and buyback program - The decision on the buyback program is independent of the European Distribution strategy, focusing on cash generation and trading performance [46][47] Question: U.S. housing market and infrastructure order book - Management sees solid growth in the U.S. housing market, while no new infrastructure bill is expected before 2020 [41][42] Question: Pricing changes and surplus capital - Pricing increases across various markets are expected to range from 1% to 7%, with a focus on margin expansion [53][54] - The company still targets €7 billion of surplus capital by 2021, factoring in previous buybacks [57]