DUBLIN (Reuters) -CRH, the largest building materials producer in the United States and Europe, expects full-year core profit to increase by a larger than expected 11% due to higher prices and robust demand for infrastructure and non-residential projects.
The Dublin-based group, which makes about 75% of its profits in the United States, expects full-year earnings before interest, tax, depreciation and amortisation (EBITDA) of $6.2 billion versus the $5.9 billion expected by analysts polled by Refinitiv.
CRH reported a 14% increase in first half EBITDA to $2.5 billion on Thursday, with profits up in all its divisions apart from Europe Building Solutions, which was down 15% year-on-year due to extended poor weather and new build residential weakness.
“Even though we are missing more than one-third of our business through residential, the other two thirds are very strong and I think it attests now to the strength of the business model that we have and the position of our markets,” CEO Albert Manifold told Reuters in an interview.
Manifold said U.S. government infrastructure stimulus would lead to a protracted period of growth there for the next five to seven years, while the so-called “reshoring” of critical supply chain manufacturing back to the United States and Europe would continue to boost non-residential projects over the same period.
That meant the group’s record profitability “looks good to continue into 2024,” he said.
CRH’s EBITDA margin also increased by 90 basis points to 15.6% in the first half after the company implemented mid-single to double-digit percentage price increases across the United States and parts of Europe.
Manifold said he expected further mid to high single digit price hikes in the United States in the second half of the year and that it would take at least a year or two – or as much four in the case of Europe – to recover all the unprecedented cost increases incurred during 2022.
(Reporting by Padraic HalpinEditing by Mark Potter and Susan Fenton)