From major public roads and infrastructure projects to commercial buildings, residential communities and some of the most iconic construction projects worldwide, Dublin-based CRH’s products have been used everywhere we live, work and play. From its humble beginnings back in the 70s, the company has emerged as a leading manufacturer and distributor of building materials in the global market, joining the coveted Fortune 500 list.
Long pursuing an active acquisition programme spending as much as €1 billion in a single year, CRH typically targets small and mid-sized businesses to grow its international network of companies. Today it employs 79,200 people worldwide and has an extraordinary geographic footprint in 30 countries on five continents, becoming the largest building materials company in America and a regional leader in Europe, while it possesses strategic positions in Asia.
A brief history of CRH
CRH was founded in the 1930s by brothers Tom and Donald Roach who eventually named the company Roadstone Ltd in 1949. For the next two decades CRH remained one of only two authorised cement producers in Ireland, becoming, in due course, what we today know as CRH - an abbreviation of Cement Roadstone Holdings - which was formed through the merger of Cement Ltd and Roadstone Ltd in 1970. The sole producer of cement and the main producer of aggregates, concrete products and asphalt in the country, the Group reported €27 million in sales, but by 1979, it had reached €328 million annual sales, while it had completed 16 acquisitions and was operating in four countries.
In 1978, the company crossed the Atlantic and set foot in the US market with the acquisition of Amcor, a concrete products company based in Utah. The move served as the stepping stone to forming its US division, while it went on to extend its influence in Europe. The next two decades marked rapid expansion as it entered new markets and increased its footprint across North America, while it cemented its presence in Eastern Europe. By the end of the 1990s, CRH had more than a dozen operations in Poland, it had completed 189 acquisitions and sales reached €6.7 billion.
By the turn of the century, CRH had become an international building materials leader, raising the bar even higher and completing a further 52 acquisition per year in the 2000s, roughly one deal per week. Then, after undergoing a game-changing transformation, the company joined the FTSE 100 and entered the global top three in building materials, while it secured a top five cement producer position in the US. By 2017, CRH‘s share price had increased 80% since 2014.
Today, the company’s global business is made up of three primary divisions, the Europe materials section, the largest heavyside materials business in Europe that accounted 34% of the group’s revenue in 2019 and the Americas materials division which generated 41% of the groups revenue the same year and has positioned the company as the leading vertically integrated supplier of aggregates, cement and asphalt amongst others. The final division is the building products section which sees the business manufacture, supply and deliver a wide range of high quality, value-added innovative products and engineered solutions. This division accounted for 25% of the group’s revenue in 2019.
In addition, CRH also operates its own network of builders, as well as consumer-oriented do-it-yourself stores in several markets, particularly the Benelux countries, Switzerland, Spain and the US. With a market cap as of December 31, 2020 of €26.71 billion, CRH is ranked as the largest Irish company, having steadily grown into an industrial powerhouse since its inception.
When did CRH go public?
CRH went public on the Irish Stock Exchange in 1973 partly in order to boost the group’s expansion objectives. The company has a primary listing on the London Stock Exchange (LSE) and secondary listings on the Irish Stock Exchange (ISE) and the New York Stock Exchange NYSE), while it forms part of the FTSE 100 index, the EURO STOXX 50 index, the ISEQ 20 and the Dow Jones Sustainability Index (DJSI).
How much would an investment in CRH’s IPO would be worth today?
An initial €10,000 investment at the end of 2009 when shares were priced at €19.01 would be worth €25,289 as at end of December 2020 assuming that all dividends were reinvested. This marks an average annual total return of 8.79% and a total return of 152.89%.
What’s more, since its IPO, CRH has consistently paid dividends to its shareholders, while it targets long-term dividend growth which is in line with its progressive dividend policy. The interim dividend paid by the company in September 2020 was that of €0.1856 per share. At the same time, the company also returned around 2.2% of its market capitalisation to shareholders in the form of stock buybacks over the past year.
Is CRH a buy?
CRH passes seven out of the nine financial tests in the Piotroski F-Score, a world-class accounting-based checklist for finding stocks, with an improving financial health trend and the company’s good score suggesting that it showcases strong signs of quality. At the same time, the building materials giant’s share price rose 15% in quarter one of 2019 and continued doing so well into April of the same year, hitting eight-month peaks above €28.26 per share. With its revenue for 2019 amounting to €25 million and its sales figure as of June 2020 reaching €11 billion, CRH’s financial health and growth prospects demonstrate its potential to outperform the market. The company’s recent earnings estimates have also been upbeat. As earnings are expected to increase and with the possibility for more robust cash flows, CRH’s stock could offer great potential for growth.
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