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Construction materials giant CRH cut management wages and board fees by 25 percent and temporarily laid off some 12,000 workers as the construction industry suffers a severe blow in Europe and North America in middle of the Covid-19 pandemic.
Still, the company sticks to plans to pay a final dividend of nearly 494 million euros on last year’s earnings, highlighting in a trade statement that it has a solid balance sheet with more than $ 6 billion (€ 5.53 billion) of cash and cash equivalents. This has been driven by a recent decision to withdraw a € 3.5 billion revolving line of credit.
In North America, although emergency restrictions have been implemented in all US states. In the US, construction to date has been considered an “essential activity” in most markets and is allowed to continue as long as appropriate safety measures are in place. CRH companies in Pennsylvania, New York and Washington state have been the hardest hit to date, he said.
The company has also experienced significantly lower levels of activity in Ontario and Quebec as a result of government construction restrictions in both markets. Business levels are currently running at 80-85 percent of normal levels in North America, Chief Executive Albert Manifold said in a call with analysts.
“However, healthy delays and a favorable bidding environment continue to support our business, and while the situation remains fluid, we are beginning to see early signs that restrictions are easing in various markets,” the group said in the commercial update. , on the eve of its annual general meeting.
Business in Europe has been hit hardest, with nationwide closings implemented in various markets. The UK is operating at 40% of normal levels, France and Spain at 30% and the Republic at 20%, Manifold said. Central and eastern European companies have been less affected.
Most of the 12,000 temporary layoffs, representing up to 15 percent of its workforce, have been in Europe as 600 of the group’s plants and sites are closed globally, Manifold told The Irish Times. The group has a total of 3,100 locations. He declined to give a breakdown for Ireland, where the company has about 1,700 employees.
Expenditure
CRH said it has suspended all non-essential and discretionary spending, with its share buyback program, which has resulted in spending € 1.8bn on the buyback of its own shares in the past two years, pending until further notice.
“Due to the unprecedented level of volatility in our markets and the uncertainty surrounding the scope and duration of government restrictions that are currently being implemented, the impact on CRH’s profitability in 2020 cannot be reasonably estimated at this time,” he said. CRH.
The construction industry is putting pressure on authorities on both sides of the Atlantic about how it should be among the initial beneficiaries as the Covid-19 restrictions are eased. “We are working with the authorities to move back to work protocols. I would expect that in mid and late May, most markets will return to some level of activity,” he said.
Still, he said it is important to act “very carefully” in relaxing restrictions to avoid the risk of secondary spikes in infections.
CRH, which spent around € 3bn on chain acquisitions during the 2008-2013 financial crisis years, hopes to see smaller “mom and dad” opportunities emerge as economies begin to recover from the pandemic, he said. Manifold, adding that deals are off the agenda.
Group-wide sales rose 3 percent in comparable terms in the first quarter, despite the fact that Covid-19 caused a significant disruption in many of its markets since mid-March.
“In these unprecedented times, financial strength and managerial experience are important, not only for survival but also for growth,” said Davy analyst Robert Gardiner. “His management team successfully led the business through the latest crisis, positioning it to take advantage of multiple growth opportunities in the past five years. This cycle could present similar opportunities to the company. ”
Share
Shares in CRH rose as much as 7.7 percent to € 26.24 each on Wednesday morning in Dublin.
CRH’s annual general meeting on Thursday will be held against strict restrictions that will see only a minimum number of shareholders attend to establish the necessary quorum.
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