Slide 1: 2018 Results
2018 Results
Slide 2: Agenda
Agenda Market Backdrop & Trading Performance Financial Performance & Track Record Value Creation & Strategic Positioning Outlook & Key Takeaways CRH plc, Preliminary Results 2018 1
Slide 3: Key Messages
Key Messages • Record profit delivery ... €3.4bn EBITDA (+7% YoY); margin ahead • Strong financial discipline maintained … €2.4bn cash generation; 70% cash conversion … <2.1x net debt/EBITDA • Continued focus on efficient capital management ... share buyback programme continuing … €800m in 2018 ...
Slide 4: 2018 Financial Highlights
2018 Financial Highlights Sales LFL EPS LFL €26.8bn +6% +3% €3.02 +33% +11% EBITDA DPS €3.4bn +7% +3% €0.72 +6% EBITDA Margin Cash Flow 12.6% +10bps in line €2.4bn +8% CRH plc, Preliminary Results 2018 3
Slide 5: Americas Market Backdrop & Trading Performance
a Americas Market Backdrop & Trading Performance
Slide 6: Americas Market Backdrop
Americas Market Backdrop • Favourable economic environment in 2018 • Continuing momentum in Infrastructure ... positive trends in Res & Non-Res markets • Significant weather disruption & input cost pressures ... energy, labour & logistics • Positive demand outlook for 2019 CRH plc, Preliminary Resul
Slide 7: Americas Materials – Trading Performance
Americas Materials – Trading Performance • Sales & EBITDA ahead … margins impacted by weather disruption & input cost pressures Change vs. 2017 2018 €m LFL • Positive pricing momentum Sales 8,951 +12% +4% • North America cement integration progressing well EBITDA 1,493 +18% +2% • 55% infrastructure
Slide 8: Americas Products – Trading Performance
Americas Products – Trading Performance • Strong growth in key regions & end-use markets Change vs. 2017 2018 €m LFL • Good progress in sales, EBITDA & margin Sales 4,433 +2% +2% • Benefiting from cost reduction & performance initiatives EBITDA 603 +5% +6% • Positive Q4 momentum ... continuing in 20
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Slide 10: Europe Market Backdrop
Europe Market Backdrop • Continued economic growth in 2018 • Solid underlying construction demand in Continental Europe • UK impacted by political uncertainty • Cost inflation headwinds … energy & labour • Expect further market growth in 2019 CRH plc, Preliminary Results 2018 9
Slide 11: Europe Heavyside – Trading Performance
Europe Heavyside – Trading Performance • Good growth in sales & EBITDA … … LFL margin maintained Change vs. 2017 • Major markets performing well … 2018 €m LFL UK impacted by Brexit-related uncertainty Sales 7,611 +10% +4% • Cement volumes ahead … positive pricing momentum EBITDA 911 +9% +4% • Fels p
Slide 12: Europe Lightside – Trading Performance
Europe Lightside – Trading Performance • Growth in all product areas Change vs. 2017 2018 €m LFL • Strong performance across Continental Europe … UK stable Sales 1,508 +5% +5% • Recovery of high input cost inflation EBITDA 152 +6% +5% Margin 10.1% +20bps - • Expanding global reach ... now ~15% ex-Eu
Slide 13: Europe Distribution – Trading Performance
Europe Distribution – Trading Performance • Major markets performing well … improving trends in Switzerland in H2 Change vs. 2017 2018 €m LFL • Divestment of DIY Benelux completed Sales 3,856 -7% -3% • Margin impacted by divestments & non-recurrence of one-off gain in 2017 EBITDA 181 -33% -1% Margin
Slide 14: Asia – Philippines Market Backdrop & Trading Performance
Asia – Philippines Market Backdrop & Trading Performance • Growing construction markets … Change vs. 2017 positive demand environment 2018 €m LFL • Volumes & prices ahead … margins eroded by Sales 431 -1% +8% strong energy cost headwinds EBITDA 25 -52% -44% • Operational improvements & cost reductio
Slide 15: Financial Performance
Financial Performance
Slide 16: Components of Financial Performance
Components of Financial Performance (81) (100) 321 99 (20) €3,365m €3,146m FY17 Organic Organic Acquisitions/ One-off FX FY18 EBITDA Ex-Asia Asia Disposals Items Translation EBITDA (cont. ops) CRH plc, Preliminary Results 2018 15
Slide 17: Cash Generation
Cash Generation (0.4) (0.3) (0.3) €3.4bn >70% Cash Conversion €2.4bn FY18 Cash Working Capital Interest Tax EBITDA Generation CRH plc, Preliminary Results 2018 16
Slide 18: 2018 Net Debt Performance
2018 Net Debt Performance 0.2 1.3 3.6 2.4 1.1 <€7bn 2.6 €5.8bn €6.8bn FY17 Net Net Debt Net Cash Dividends/ FY18 Acquisitions Capex FX/Other Net Debt Divestments Post M&A Inflow Buybacks Net Debt €3.15bn €3.37bn EBITDA EBITDA >1.8x <2.1x Net Debt/EBITDA CRH plc, Preliminary Results 2018 17
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Slide 20: CRH … Performance & Growth 2013-2018
CRH … Performance & Growth 2013-2018 2013 2018 €18bn €27bn +49% Revenue Revenue +8% CAGR €1.5bn €3.4bn +128% EBITDA EBITDA +18% CAGR 8.2% 12.6% +440bps Margin Margin €1.2bn €2.4bn +102% Free Cash Free Cash +15% CAGR 5.9% 9.6% +370bps RONA RONA CRH plc, Preliminary Results 2018 19 Free Cash = EBITDA
Slide 21: CRH … Organic Growth 2013-2018
CRH … Organic Growth 2013-2018 Group Europe Americas Sales CAGR Sales CAGR Sales CAGR +€3.3bn +18% +3% +12% +2% +24% +4% EBITDA EBITDA EBITDA +€815m +55% +9% +35% +6% +77% +12% 25% 19% 30% Operating Leverage Operating Leverage Operating Leverage CRH plc, Preliminary Results 2018 20
Slide 22: CRH … Acquisition Growth 2013-2018
CRH … Acquisition Growth 2013-2018 Group Europe Americas Sales CAGR Sales CAGR Sales CAGR +€9.1bn +50% +8% +55% +9% +41% +7% EBITDA EBITDA EBITDA +€1.4bn +94% +14% +105% +15% +73% +12% 15% 13% 17% EBITDA Margin EBITDA Margin EBITDA Margin CRH plc, Preliminary Results 2018 21
Slide 23: Net Debt / EBITDA (x)
Strong Financial Discipline … ~2x Net Debt / EBITDA maintained through the cycle 3.0 2.5 Net Debt / EBITDA (x) 2.0 ~2x 10yr avg. 1.5 1.0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 CRH plc, Preliminary Results 2018 22 In 2015, CRH acquired LH Assets for €6.5bn and CRL for $1.3bn
Slide 24: Free Cash Flow Generation
Free Cash Flow Generation ~€2.1bn of FCF per annum … ~80% EBITDA conversion … ~10% FCF Yield 2.5 ~€2.1bn Free Cash Flow (€bn) 2.0 5yr avg. 1.5 1.0 2014 2015 2016 2017 2018 FCF Yield 9.1% 11.1% 10.5% 8.8% 10.1% ~10% CRH plc, Preliminary Results 2018 23 Free Cash = EBITDA +/- WC movements - Interest -
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Slide 26: Our Strategic Objectives …
Our Strategic Objectives … Portfolio Management … Re-shaping our business for higher growth & more sustainable returns Capital Allocation … Maximising shareholder value through the efficient use of capital Continuous Business Improvement … Making businesses better through internal self-help initiati
Slide 27: Significant Progress …
Significant Progress … Portfolio Capital Continuous Business Management Allocation Improvement • Continuous portfolio review • ~€3bn returned to • Targeting further 300bps • Narrower & deeper across 3 shareholders past 5 years EBITDA margin improvement divisions • Strong balance sheet … • Initiative
Slide 28: Profit Improvement Programme
Profit Improvement Programme • Group-wide initiative … managed centrally, delivered locally • Business improvement & growth … higher margins, returns & cash • 70% to be internally delivered … procurement, process & structural • Progressing well ... regular updates to market as delivery unfolds CRH p
Slide 29: Profit Improvement Programme – Procurement
Profit Improvement Programme – Procurement • Driving centralised procurement across the Group • Broadening scope & depth … 2% to 4% savings • Key categories ... raw materials; energy; logistics; production services; consumables; mobile plant • €100m+ savings already identified CRH plc, Preliminary R
Slide 30: Profit Improvement Programme – Process
Profit Improvement Programme – Process • Leveraging Group expertise to drive local improvements • Increasing vertical integration & self-supply • Reducing fuel & energy usage ... transport & logistics efficiencies • Optimising production footprint ... improved scheduling, throughput & maintenance CR
Slide 31: Profit Improvement Programme – Structural
Profit Improvement Programme – Structural • A more focused & leaner business … … 7 divisions to 3 • Integrated platforms of scale • Reorganising management structures, support functions & regional office footprint • ~€100m of cost savings identified … implementation in process CRH plc, Preliminary R
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Slide 33: CRH in 2019 …
CRH in 2019 … Three core businesses … Leading market positions … integrated platforms for growth Europe & North America A unique business model … Strong & flexible balance sheet … driving returns from the centre industry-leading cash generation … relentless focus on performance & delivery CRH plc, P
Slide 34: Americas Materials …
Americas Materials … • #1 building materials business in North America … CRH Market Heat Map national footprint; unrivalled reserves • Attractive regional exposures … North – core base; steady growth … Infra RMI focus South/West – strong growth … new-build Res/Non-Res Central – stable markets … inte
Slide 35: Americas Materials – Operating Model
Americas Materials – Operating Model Uniquely integrated approach … … best-in-class operators Revenue by Product Aggregates GM% ~28% ~26% ~28% ~75% ~60% ~15% CRH US Company A Company B CRH US Company A Company B Aggs Asphalt RMC Contracting/Other … delivering higher overall returns & cash CRH plc, P
Slide 36: North America Cement Update
North America Cement Update • North America Cement platform established … integration progressing well ... • Further $10m Ash Grove synergies identified … year 3 run-rate increased to ~$110m • Strengthened market footprint … strong overlap with existing businesses … • Significant self-supply, downst
Slide 37: Europe Materials …
Europe Materials … • Integrated platform of heavyside building materials businesses … #1 in Europe • Attractive geographic footprint … … West – stable market; RMI focus (+1% to 2% p.a.) … East – strong new-build growth (+5% p.a.) • Top 3 in all major markets … no exposure to Southern Europe … well p
Slide 38: Europe Materials – Operating Model
Europe Materials – Operating Model Uniquely integrated approach … … best-in-class operators Revenue by Product Cement EBITDA Margin % ~26% ~26% ~23% ~60% ~45% ~20% CRH CRH Company A Company B Company A Company B Europe Europe Cement Aggs RMC/Other … delivering higher overall returns & cash CRH plc,
Slide 39: Building Products Overview …
Building Products Overview … Supplier of value-added products & integrated solutions for the construction industry Infrastructure Products ... Architectural Products… 2013 2018 … protecting & transporting … innovative & value-added vital utilities & products for the modern Sales infrastructure servi
Slide 40: Building Products – Evolving Trends
Building Products – Evolving Trends • Evolving trends in global construction markets … ease & speed of construction; less labour intensive … demand for more integrated & value-added solutions … regulatory & environmental factors • Proven buy & build capability … established leadership positions in h
Slide 41: Building Products – Rationale
Building Products – Rationale • Global division established ... leveraging our scale & capabilities ... increased vertical integration ... de-layering management & costs • Core businesses … clusters of excellence; narrower & deeper • Attractive end-use markets … higher growth & greater balance throu
Slide 42: Building Products – Value Creation
Building Products – Value Creation • Addressing the changing needs of construction … increased integration with our materials businesses … bundling products, logistics & services … value-added solutions for increasingly global customers • Increased collaboration … across regions, materials & product
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Slide 44: Efficient Use of Capital
Efficient Use of Capital • Highly cash generative business … 70% conversion • Strong & flexible balance sheet • Focused & disciplined approach to capital deployment • Value-accretive capex and M&A • Continued share buybacks & progressive dividends … relentless focus on shareholder value CRH plc, Pre
Slide 45: 2019 Expectations
2019 Expectations Market Outlook • Americas – favourable market dynamics expected • Europe – continued progress in key markets • Group – positive Q4 momentum continuing into 2019 Strategy • Relentless focus on continuous business improvement ... margins, cash & returns • Continued strong financial d
Slide 46: Key Takeaways
Key Takeaways Record profit delivery … Strong track record of delivery Continuous improvement ... margin ahead … organic & acquisition margins, cash & returns €2.4bn cash generation … Share buyback programme Uniquely positioned for further strong financial discipline continuing … €800m in 2018 growt
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Slide 48: Key Components of 2018 Performance (Continuing Operations)
Key Components of 2018 Performance (Continuing Operations) Sales Operating Profit/(loss) Finance Assoc. and Pre-tax € million EBITDA revenue profit on disposals costs (net) JV PAT1 profit 2017 25,220 3,146 2,095 56 (349) 65 1,867 Exchange effects (682) (100) (68) (2) 9 (2) (63) 2017 at 2018 rates 24
Slide 49: Americas Materials
Americas Materials Analysis of change € million 2017 Exchange Acquisitions Divestments Organic 2018 % Change Sales revenue 7,970 -356 +1,026 -26 +337 8,951 +12% EBITDA 1,270 -56 +267 -12 +24 1,493 +18% Operating Profit 858 -37 +176 -9 +21 1,009 +18% EBITDA/sales 15.9% 16.7% Operating profit/sales 10
Slide 50: Americas Products
Americas Products Analysis of change € million 2017 Exchange Acquisitions Divestments Organic 2018 % Change Sales revenue 4,327 -187 +193 -2 +102 4,433 +2% EBITDA 573 -25 +21 +1 +33 603 +5% Operating Profit 435 -19 +12 +1 +30 459 +6% EBITDA/sales 13.2% 13.6% Operating profit/sales 10.1% 10.4% CRH pl
Slide 51: Europe Heavyside
Europe Heavyside Analysis of change Pension € million 2017 Exchange Acquisitions Divestments Organic 2018 % Change credit1 Sales revenue 6,902 -54 +511 -53 - +305 7,611 +10% EBITDA 839 -9 +65 -1 -20 +37 911 +9% Operating Profit 478 -6 +36 - -20 +13 501 +5% EBITDA/sales 12.2% 12.0% Operating profit/s
Slide 52: Europe Lightside
Europe Lightside Analysis of change € million 2017 Exchange Acquisitions Divestments Organic 2018 % Change Sales revenue 1,440 -11 +16 -12 +75 1,508 +5% EBITDA 143 -1 +2 +1 +7 152 +6% Operating Profit 102 -1 +1 +1 +7 110 +8% EBITDA/sales 9.9% 10.1% Operating profit/sales 7.1% 7.3% CRH plc, Prelimina
Slide 53: Europe Distribution
Europe Distribution Analysis of change Pension € million 2017 Exchange Acquisitions Divestments Organic 2018 % Change credit2 Sales revenue1 4,145 -38 +109 -255 - -105 3,856 -7% EBITDA 269 -2 +2 -25 -61 -2 181 -33% Operating Profit 207 -1 +1 -19 -61 -15 112 -46% EBITDA/sales 6.5% 4.7% Operating prof
Slide 54: Asia
Asia Analysis of change € million 2017 Exchange Organic 2018 % Change Sales revenue 436 -36 +31 431 -1% EBITDA 52 -7 -20 25 -52% Operating Profit 15 -4 -25 -14 -193% EBITDA/sales 11.9% 5.8% Operating profit/sales 3.4% -3.2% CRH plc, Preliminary Results 2018 53
Slide 55: Cement Volumes & Pricing
Cement Volumes & Pricing YoY % Change Volumes Price (LC) YoY % Change Volumes Price (LC) Finland - = Slovakia = = France = + Spain -- + Germany1 + + Switzerland ++ -- Legend >5% ++ Hungary ++ + Ukraine - ++ 2% to 5% + Ireland + + United Kingdom1 - = -1% to +1% = -5% to -2% - Poland ++ + Canada - = -
Slide 56: Americas Materials Volumes & Prices
Americas Materials Volumes & Prices Total Heritage YoY % Change Volumes Price Volumes Price Aggregates +8% +2% +1% +3% Asphalt -2% +9% -3% +10% RMC +29% +3% -1% +4% CRH plc, Preliminary Results 2018 55
Slide 57: 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 58: CRH plc Investor Relations
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 CRH plc, Preliminary Results 2018 57