CRH sees 4% advance in 1Q sales
CRH reported a ‘satisfactory’ start to 2017 with first quarter sales up four per cent compared with a strong first quarter of 2016 which benefitted from very mild weather conditions across all its major markets.
In a trading update released today in advance of its AGM taking place tomorrow, the Irish building materials major said group EBITDA for the "seasonally less significant first half of the year" is expected to be ahead of last year (1H16: EUR1.12bn). Based on current momentum, further progress in the second half of the year is anticipated.
Like-for-like group sales for the first quarter of 2017 increased by three per cent compared with the same period last year. In the Americas, CRH said that despite less favourable weather conditions and very challenging prior year comparatives, the economic and business environment remained positive and, excluding the favourable impact of the strong US dollar exchange rate this year, like-for-like sales were in line with 2016. In Europe like-for-like sales growth of six per cent was supported by stabilising trends in certain key markets and by the timing of Easter holidays which occurred in the first quarter of 2016. Activity in the Philippines had a slow start to the year with like-for-like sales 12 per cent behind 1Q16 impacted by poor weather and competitive market conditions.
Europe update
CRH noted that the broad-based recovery evident in a number of key markets in 2016 has continued into the first quarter of 2017. This contributed to solid demand in Europe, albeit with mixed weather and competitive pricing in some regions. Like-for-like sales growth of six per cent for the first quarter was supported by stabilising trends in certain key markets, and the fact that, unlike 2016, the Easter holiday did not impact on the first quarter of this year.
In Europe Heavyside, despite mixed weather conditions, like-for-like sales were eight per cent ahead of 2016. The UK saw a positive start to the year as volumes and prices of aggregates, ready-mixed concrete and asphalt were ahead of 2016, with cement volumes marginally behind. In Switzerland the company reported lower volumes due to less favourable weather and competitive market conditions. Volumes in The Netherlands were impacted by poor weather, but growth in the residential sector continues. Cement volumes and prices in Poland were slightly ahead of 2016, but downstream volumes were behind. In Finland cement volumes increased thanks to favourable weather and large projects as well as competitive pricing. Over in France, growth in the residential sector spurred volumes to be ahead of those recorded in 2016. Meanwhile, in southeast Europe Romania was impacted by adverse weather resulting in marginally lower volumes.
Americas update
Against the backdrop of improving construction activity in the United States and broadly stable activity in the company's main Canadian markets, but with very challenging prior year comparatives, overall like-for-like sales for its Americas operations in the first quarter were in line with 1Q16.
Although less favourable weather conditions for CRH's Americas Materials operations resulted in lower volumes of aggregates and ready-mixed concrete, positive pricing trends in both products were experienced compared with the first quarter of 2016. Asphalt volumes and construction revenues were ahead reflecting continued momentum.
CRH underlined that this markedly seasonal business typically sells less than 10 per cent of annual asphalt volumes and less than 20 per cent of aggregates and readymixed concrete volumes in the first quarter of the year. Like-for-like sales for the first quarter were two per cent ahead of 2016.
The company noted that in the US infrastructure segment, federal funding is increasing moderately and improvements are being seen in state funding. Improving activity in the non-residential sector is also supporting positive volumes and pricing trends.
CRH's US aggregates and ready-mixed concrete like-for-like volumes down in the first quarter. However, asphalt volumes were ahead in the three-month period and cement sales in Canada were in line with 1Q16.
Asia update
In Asia a slow start to the year in CRH's key regions in the Philippines, resulted in cement volumes declining in the first quarter impacted by unfavourable weather conditions. Like-for-like sales were 12 per cent behind a challenging prior year comparative. CRH noted that markets remained highly competitive, with a negative impact on selling prices.
1H17 outlook
In the Americas with the benefit of a positive demand environment, EBITDA is expected to be ahead of last year (1H16: EUR563m), according to management. While the group expects first half EBITDA in Europe to be broadly in line (1H16: EUR499m). EBITDA for Asia is expected to be behind due to competitive pricing conditions in the Philippines (1H16: EUR58m).
2H17 outlook
Looking ahead to the second half of the year, in Europe CRH expects some modest improvement across our main markets. In the United States, residential construction, which has still not returned to long-term average levels, is expected to advance. Non-residential activity is also expected to improve. For US infrastructure, the group anticipates that the funding stability provided by the FAST Act will lead to a more positive trend for volumes in the 2H17. As a result, CRH expects EBITDA improvements in the Americas in the second half of the year. In Asia expectations are for challenging market conditions in the Philippines to continue in the second half of this year. Against this backdrop and based on current momentum, CRH continues to expect to make further progress on a group EBITDA basis in 2H17.
