Download pdf - #2 32 - CRH plc · CRH plc, May 2018 25 Disclaimer In order to utilise the “Safe Harbor” provisions of the United States Private Securities Litigation Reform Act of 1995, CRH

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

eclin

e f

rom

peak

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

eclin

e f

rom

peak

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


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)


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


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


As Announced at our Recent AGM (April 2018) …


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


• 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


• 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 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 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



Efficient Capital Management … Portfolio Review

• In 2014 … announced a €1.5bn to €2bn divestment programme …

… realised in excess of €4bn

• Continuously managing our asset base …

… an embedded practice in CRH

• Delivering value through efficient recycling of capital Further €1.5bn to €2bn

of divestments over the

medium-term


Capital Allocation … Significant Optionality

• Value-accretive Capex … Supporting our business ... low risk investments

• Dividends … Continued commitment

• Value-driven M&A … Significant opportunities

• Surplus Cash … Return to shareholders

… Relentless focus on shareholder value


Key Takeaways …

• Organisation … Simpler with 3 divisions … global Building Products … review of Europe Distribution

• Market outlook … Solid fundamentals … N. America +2% to +3% ... Europe +2%

• Operating leverage … Guiding operating leverage of 20%+

• EBITDA margins … Targeting EBITDA margin improvement of 300bps by 2021

• Efficient Capital Management … further €1.5bn to €2bn of divestments over the medium-term

• Cash generation … capacity of €7bn after capex & dividends … before divestments

• Capital allocation … value-accretive capex … dividends … value-driven M&A … surplus cash returns



Building Products Overview (2017)

€m Europe Lightside Europe Distribution Americas Products Building Products

Sales 1,440 4,145 4,327 9,912

EBITDA 143 269 573 985

EBITDA Margin 9.9% 6.5% 13.2% 9.9%

EBIT 102 207 435 744

Construction

Accessories, 35%

Architectural

Products, 30% Network Access Products &

Perimeter Protection, 20%

Shutters &

Awnings, 15%

General Builders

Merchants, 60%

SHAP, 20% DIY, 20%

Architectural

Products, 45%

Building

Envelope®, 35%

Precast, 20%

Residential, 40% Residential, 75% Residential, 45%

Non-Res, 40% Non-Res, 20%

Infra, 5% Infra, 20%

Non-Res, 50%

Infra, 5%

Residential, 57%

Non-Res, 36% Infra, 7%

Americas

Products, 44%

Europe

Distribution, 42%

Europe

Lightside, 14%

Product and sector exposures are based on sales


Disclaimer

In order to utilise the “Safe Harbor” provisions of the United States Private Securities Litigation Reform Act of 1995, CRH public limited company (the

“Company”), and its subsidiaries (collectively, “CRH” or the “Group”) is providing the following cautionary statement.

This document contains certain forward-looking statements with respect to the financial condition, results of operations, business, viability and future

performance of CRH and certain of the plans and objectives of CRH. These forward-looking statements may generally, but not always, be identified by

the use of words such as "will", "anticipates", "should", "expects", "is expected to", "estimates", "believes", "intends" or similar expressions.

By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may or may not

occur in the future and reflect the Company's current expectations and assumptions as to such future events and circumstances that may not prove

accurate.

A number of material factors could cause actual results and developments to differ materially from those expressed or implied by these forward-looking

statements, certain of which are beyond our control, as detailed in the section entitled “Risk Factors” in our 2017 Annual Report on Form 20-F as filed

with the US Securities and Exchange Commission.

You should not place undue reliance on any forward-looking statements. These forward-looking statements are made as of the date of this document.

The Company expressly disclaims any obligation to update these forward-looking statements other than as required by law.

The forward-looking statements in this document do not constitute reports or statements published in compliance with any of Regulations 6 to 8 of the

Transparency (Directive 2004/109/EC) Regulations 2007.


Contact Information

CRH plc

Investor Relations

Stonemason’s Way

Rathfarnham

Dublin 16

D16 KH51

Ireland

Telephone: +353 1 404 1000

Email: [email protected]

Website: www.crh.com

The inclusion of CRH public limited company in any MSCI Index, and the use of MSCI logos, trademarks, service marks or index names herein, do not constitute a

sponsorship, endorsement or promotion of CRH public limited company by MSCI or any of its affiliates. The MSCI Indexes are the exclusive property of MSCI. MSCI

and the MSCI Index names and logos are trademarks or service marks of MSCI or its affiliates.