#2 32 - CRH plc CRH plc, May 2018 25 Disclaimer In order to utilise the “Safe Harborâ€‌ provisions

  • View
    0

  • Download
    0

Embed Size (px)

Text of #2 32 - CRH plc CRH plc, May 2018 25 Disclaimer In order to utilise the “Safe Harborâ€‌...

  • CRH plc, May 2018 1

    €27.6bn Revenue

    €3.3bn EBITDA

    #2 Worldwide

    32 Countries

    85,000 People

    Fortune

    500 Company

    Euro Stoxx

    50 Company

    FTSE

    100 Company

    A Global Building Materials Group

  • CRH plc, May 2018 2

    Natural demand for construction products driven by:

    • Population growth

    • Economic development

    • New-build and repair, maintenance & improvement

    The Industry is fragmented:

    • Opportunities for acquisitions … room to grow

    • Significant benefits of scale … locally, regionally, globally

    Why Invest in Building Materials?

    … Long-term drivers of construction growth

  • CRH plc, May 2018 3

    Why Invest in Building Materials?

    … Strong fundamentals underpin growth in our main markets

    100

    110

    120

    130

    140

    150

    160

    1970 1980 1990 2000 2010

    US

    EUR

    Population Growth

    100

    125

    150

    175

    200

    225

    250

    275

    300

    1990 1995 2000 2005 2010 2015

    US CAGR

    +4%

    Construction Growth

    100

    150

    200

    250

    300

    350

    1990 1995 2000 2005 2010 2015

    US CAGR

    +4%

    EUR CAGR

    +3%

    GDP Growth

    1970 2017 1990 2017 1990 2017

    EUR CAGR

    +3%

  • CRH plc, May 2018 4

    1970s

    1980s

    1930s

    ‘07

    ‘08

    ‘09 ‘10

    ‘11 ‘12

    ‘13 ‘14 ‘15

    ‘16

    ‘17 ‘18F

    -75%

    -50%

    -25%

    0%

    0 1 2 3 4 5 6 7 8 9 10 11 12

    % D

    e c li n

    e f

    ro m

    p e a k

    Year

    1973-1978 1979-1985 1929-1941 2006-2018F

    Still some way to run in the cycle …

    1970s 1980s 1990s

    ‘08

    ‘09

    ‘10 ‘11

    ‘12 ‘13 ‘14 ‘15 ‘16

    ‘17 ‘18F

    -60%

    -40%

    -20%

    0%

    0 1 2 3 4 5 6 7 8 9 10 11

    % D

    e c li n

    e f

    ro m

    p e a k

    Year

    1973-1980 1980-1989 1991-1998 2007-2018F

    Source: Global Cement Report, US Geological Survey, PCA, UN, Morgan Stanley

    Recovery in early stages …

    Where are we in the Recovery Cycle? Our main markets …

    U.S. Europe

    U.S. Cement Demand Europe Cement Demand

  • CRH plc, May 2018 5

    €28bn

    Revenue

    €3.3bn EBITDA

    2017

    +124%

    +97%

    +53% €18bn

    Revenue

    €1.5bn EBITDA

    2013

    CRH … Performance & Growth

    €2.3bn Free Cash

    €1.2bn Free Cash

    +87%

    Free Cash = EBITDA +/- WC movements - Interest - Tax

    €13bn Market Cap

    €25bn Market Cap

  • CRH plc, May 2018 6

    • Significant portfolio review initiated in 2014 … €4bn+ divestment proceeds

    • Since then, we have reallocated capital & reshaped our business

    • This also included value-accretive M&A … €10bn acquisitions

    • Increasing our exposure to higher growth markets e.g. Southern / Western U.S. and Eastern Europe

    • Leading to structurally higher margins, a better business mix … and improving returns & cash

    CRH … a Better Business

    … Continuously adapting to changing markets

  • CRH plc, May 2018 7

    1.5 1.6

    2.2

    3.1 3.3

    1.2

    1.7

    2.2

    2.7

    3.2

    3.7

    2013 2014 2015 2016 2017

    18.0

    18.9

    23.6

    27.1 27.6

    15

    20

    25

    30

    2013 2014 2015 2016 2017

    Sales (€bn)

    EBITDA (€bn)

    CAGR

    +11%

    CAGR

    +22%

    Strong growth in Sales and EBITDA …

  • CRH plc, May 2018 8

    6%

    7%

    9%

    10%

    11%

    5%

    7%

    9%

    11%

    2013 2014 2015 2016 2017

    8%

    9% 9%

    12% 12%

    7%

    9%

    11%

    13%

    2013 2014 2015 2016 2017

    EBITDA % Returns %

    +400bps +500bps

    Returns = EBIT / Net Assets

    Improved Margins and Returns …

  • CRH plc, May 2018 9

    1.2 1.3

    2.3 2.4 2.3

    0.5

    1.0

    1.5

    2.0

    2.5

    2013 2014 2015 2016 2017

    Free Cash Flow (€bn)

    Generating Strong Cash Flows …

    • Converting ~80% of profits into cash

    • Generating €2bn+ cash p.a.

    • ... before disposals

    Free Cash = EBITDA +/- WC movements - Interest - Tax

  • CRH plc, May 2018 11

    (Divested Jan 2018)

    Building a Simpler & More Focused Business

    (i) Europe Heavyside and Asia

    (ii) Europe Lightside, Europe Distribution and Americas Products

    (iii) 2017 reported, continuing operations

    Europe

    Heavyside

    Europe

    Lightside

    Europe

    Distribution

    Americas

    Products

    Americas

    Distribution Asia

    Previous Structure

    Americas

    Materials

    … Further re-shaping the Group for future growth

    Europe

    Materials (i) Building

    Products (ii)

    Narrower

    &

    Deeper

    New Structure (Jan 2019)

    Americas

    Materials

    ~30% of EBITDA (iii) ~30% of EBITDA (iii) ~40% of EBITDA (iii)

  • CRH plc, May 2018 12

    Building Products … Establishing a Global Platform

    • Related businesses, organised under separate structures in Europe and U.S.

    • Now combining regional structures to form one global platform … together, ~30% of Group EBITDA

    • Significant further opportunities for growth and value creation

    • Strong track record of profitable growth … leadership positions in high-growth segments

    • Leverage our scale & capabilities … and benefit from horizontal integration & network synergies

    • Meet the changing needs of construction

    … Creating value through our global scale

  • CRH plc, May 2018 13

    Strategic Review of Europe Distribution

    • Leading European distributor of Building Materials …

    … €4bn sales across 6 countries in a number of different segments

    • Mixed performance in recent years … Strategic Review of the business is underway

    • This will be focused on improving our margins & returns …

    … and will also explore other strategic options

    … Identifying opportunities to create further value

  • CRH plc, May 2018 14

    As Announced at our Recent AGM (April 2018) …

  • CRH plc, May 2018 15

    United States

    • Solid fundamentals

    • Funded Infra programmes to drive investment (+3% p.a.)

    • Continued Res (+3% p.a.) … Non-Res (+2% p.a.) demand

    • Positive price dynamics in the marketplace

    Canada

    • Favourable backdrop … construction market growth +2% p.a.

    • Pricing in line with recent trends

    Market Outlook to 2021 … North America

  • CRH plc, May 2018 16

    • Market recovery driven by residential sector

    • Recovery underway across European markets (+2% p.a.) …

    … Eastern Europe … strong new-build growth (+5% p.a.)

    … Western Europe … RMI focus (+1% to +2% p.a.)

    • Pricing continuing to show signs of recovery

    Market Outlook to 2021 … Europe

  • CRH plc, May 2018 17

    • Recent years … guided organic leverage of 15% to 20%

    • Our improving business mix brings …

    … structurally higher margins

    … with better cash generation

    … and higher returns

    CRH by 2021 … Higher Operating Leverage

    Now guiding operating

    leverage of 20%+

  • CRH plc, May 2018 18

    CRH by 2021 … Higher Margins

    • Our business mix is narrower & deeper …

    … driving greater value through our operations

    • Enhancing our Process efficiencies

    • Leveraging our scale … increasing Procurement savings

    • Simpler, leaner structures supporting our businesses Targeting EBITDA margin

    improvement

    of 300bps by 2021

  • CRH plc, May 2018 19

    CRH by 2021 … Generating More Cash

    • Continued strong cash conversion (FCF / EBITDA) of 70%+

    • Working capital discipline

    • Strong capex management … guiding to be broadly in line with depreciation

    • Continued commitment on dividends

    • Maintain investment grade credit rating …

    … guiding net debt / EBITDA at 2.0x

    … provides €7bn unutilised

    financial capacity by 2021 …

    … before divestments

    Free Cash = EBITDA +/- WC movements - Interest - Tax

  • CRH plc, May 2018 20

    Effic