Crh Plc · NYSE:CRH
Crh — Investor Presentation (May 2018)
27 slides from Crh's investor presentation, May 2018
Slide 1: A Global Leader in Building Materials, May 2018
Slide 2: A Global Building Materials Group
A Global Building Materials Group Fortune Euro Stoxx FTSE €27.6bn €3.3bn #2 32 85,000 500 50 100 Revenue EBITDA Worldwide Countries People Company Company Company CRH plc, May 2018 1
Slide 3: Why Invest in Building Materials?
Why Invest in Building Materials? 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, re
Slide 4: Why Invest in Building Materials? Strong fundamentals underpin growth
Why Invest in Building Materials? Population Growth GDP Growth Construction Growth 350 US CAGR 300 160 US US CAGR +4% +4% 275 150 300 250 140 EUR CAGR 225 EUR CAGR 250 +3% +3% 130 200 200 175 120 EUR 150 150 110 125 100 100 100 1970 1980 1990 2000 2010 2017 1990 1990 1995 2000 2005 2010 2015 2017 19
Slide 5: Where are we in the Recovery Cycle?
Where are we in the Recovery Cycle? Our main markets … U.S. Europe Year Year 0 1 2 3 4 5 6 7 8 9 10 11 12 0 1 2 3 4 5 6 7 8 9 10 11 0% 0% 1930s 1990s 1980s 1970s 1970s ‘07 % Decline from peak 1980s % Decline from peak ‘16 ‘08 ‘14 ‘15 -25% ‘13 -20% ‘08 ‘18F ‘12 ‘17 ‘11 ‘10 ‘09 ‘09 ‘10 ‘11 -50% -40% ‘
Slide 6: CRH … Performance & Growth
CRH … Performance & Growth 2013 2017 €18bn €28bn Revenue Revenue +53% €1.5bn €3.3bn EBITDA EBITDA +124% €1.2bn €2.3bn Free Cash Free Cash +97% €13bn €25bn Market Cap Market Cap +87% CRH plc, May 2018 5 Free Cash = EBITDA +/- WC movements - Interest - Tax
Slide 7: CRH … a Better Business
CRH … a Better Business • 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 / West
Slide 8: Strong growth in Sales and EBITDA
Strong growth in Sales and EBITDA … 30 3.7 Sales 27.6 EBITDA 3.3 (€bn) 27.1 3.2 (€bn) 3.1 25 23.6 2.7 CAGR CAGR 2.2 +11% +22% 2.2 18.9 20 18.0 1.6 1.7 1.5 15 1.2 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 CRH plc, May 2018 7
Slide 9: Improved Margins and Returns
Improved Margins and Returns … 13% EBITDA % 12% Returns % 11% 11% 12% 10% 11% 9% 9% 9% +400bps +500bps 7% 9% 9% 8% 7% 6% 7% 5% 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 CRH plc, May 2018 8 Returns = EBIT / Net Assets
Slide 10: Generating Strong Cash Flows
Generating Strong Cash Flows … Free Cash Flow (€bn) 2.5 2.4 2.3 2.3 • Converting ~80% of profits into cash 2.0 • Generating €2bn+ cash p.a. 1.5 1.3 1.2 • ... before disposals 1.0 0.5 2013 2014 2015 2016 2017 CRH plc, May 2018 9 Free Cash = EBITDA +/- WC movements - Interest - Tax
Slide 11: Organisation & Strategy
Slide 12: Building a Simpler & More Focused Business
Building a Simpler & More Focused Business Previous Structure Europe Europe Europe Americas Americas Americas Asia Heavyside Lightside Distribution Products Materials Distribution (Divested Jan 2018) Narrower & Deeper New Structure (Jan 2019) Europe Building Americas Materials (i) Products (ii) Mate
Slide 13: Building Products … Establishing a Global Platform
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
Slide 14: Strategic Review of Europe Distribution
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 & return
Slide 15: As Announced at our Recent AGM (April 2018)
As Announced at our Recent AGM (April 2018) … CRH plc, May 2018 14
Slide 16: Market Outlook to 2021 … North America
Market Outlook to 2021 … North America 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. •
Slide 17: Market Outlook to 2021 … Europe
Market Outlook to 2021 … Europe • 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 CRH plc, May 201
Slide 18: CRH by 2021 … Higher Operating Leverage
CRH by 2021 … Higher Operating Leverage • Recent years … guided organic leverage of 15% to 20% • Our improving business mix brings … … structurally higher margins … with better cash generation … and higher returns Now guiding operating leverage of 20%+ CRH plc, May 2018 17
Slide 19: CRH by 2021 … Higher Margins
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 improvemen
Slide 20: CRH by 2021 … Generating More Cash
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 … … provides €7bn unutil
Slide 21: Efficient Capital Management … Portfolio Review
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 divest
Slide 22: Capital Allocation … Significant Optionality
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 CRH plc, May 2018
Slide 23: Key Takeaways
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 impro
Slide 24: Appendices
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Slide 25: Building Products Overview (2017)
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 Architectural Americas General Builders Accessories, 35% Products, 4
Slide 26: Disclaimer
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 cont
Slide 27: Contact Information
Contact Information CRH plc Investor Relations Stonemason’s Way Rathfarnham Dublin 16 D16 KH51 Ireland Telephone: +353 1 404 1000 Email: ir@crh.com 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