Building materials giant CRH, the largest company on the Irish stock market, saw its shares soar 7.9 per cent in Dublin on Thursday as it unveiled plans to move its primary shares listing to the US and accelerate its share buyback programme.
North America now accounts for three-quarters of its earnings. The hope in the market is that the group would trade at a premium relative to profits by being listed in the US, where companies traditionally trade on higher earnings multiples compared to Europe.
“The US is expected to be a key driver of future growth for CRH and our exposure to this market is likely to increase further driven by substantial increases in infrastructure funding, a renewed drive for the onshoring of manufacturing activity and significant levels of under-build in the residential construction market,” the company said as it reported a strong set of full-year results.
Since late 2011, the group has had a primary listing has been in London with a secondary one in Dublin. A spokesman declined to comment on the future of these listings, pending the outcome of the company’s shareholder engagement in the coming weeks. An update will be given on April 26th when CRH, which was formed in 1970 through the merger of the already publicly quoted Irish Cement and Roadstone companies, is scheduled to issue a trading update.
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A majority of at least 75 per cent of CRH shareholders would need to approve a move in the primary listing.
CRH also announced that it plans to spend $3 billion (€2.8 billion) buying back its own stock, more than double the amount committed last year, after posting solid full-year results that left it sitting on what it described as “the strongest balance in our history”.
CRH spent $1.2 billion on share repurchases last year, bringing the amount it has spent on buybacks since 2018 to more than $4 billion. Shares in CRH jumped 7.9 per cent to €48.01, giving the group a market value of €35.7 billion.
“The increase in our share buyback programme demonstrates our confidence in the outlook for our business and our continued strong cash generation, while retaining the financial flexibility to invest in further growth and value creation opportunities for our shareholders,” CRH said.
CRH’s earnings before interest, tax, depreciation and amortisation (ebitda) rose by a target-beating 13 per cent last year to $5.6 billion, outpacing a 12 per cent increase in sales, to $32.7 billion, as it managed to expand its earnings margins despite significant cost inflation over the period. The company had previously forecast that its ebitda would amount to $5.5 billion.
The increased margin “represents a remarkable out-turn in the face of significant inflationary headwinds and testament to the integrated value add solutions model,” said David O’Brien, an analyst with Goodbody Stockbrokers.
The group, led since 2014 by chief executive Albert Manifold, saw its net debt decline to 0.9 times ebitda by the end of last year from a ratio of 1.3 times in 2021, through a combination of reduced borrowings and higher earnings. Its net debt stood at $5.1 billion at the end of the reporting period.