Agenda - Home | CRH · CRH plc, AGM 2018 27 U.S. • Public Infra +3% p.a… Residential markets...
Transcript of Agenda - Home | CRH · CRH plc, AGM 2018 27 U.S. • Public Infra +3% p.a… Residential markets...
CRH plc, AGM 2018 1
Agenda
Our Business … Rock Solid
Performance in last 5 Years
Delivering Returns in CRH
CRH plc, AGM 2018 3
Natural demand for construction products driven by:
• Population Growth
• Economic Development
• New-Build and Repair, Maintenance and Improvement
The Industry is fragmented:
• Opportunities for acquisitions… room to grow
• Significant benefits of scale…
Why invest in Building Materials?
… Long-term drivers of construction growth
CRH plc, AGM 2018 4
100%
120%
140%
160%
1970 1980 1990 2000 2010
Why invest in Building Materials?
US
EUR
Population Growth
100
125
150
175
200
225
250
275
300
1990 1995 2000 2005 2010 2015
US CAGR
+4%
EUR CAGR
+3%
Construction Growth
100
150
200
250
300
350
1990 1995 2000 2005 2010 2015
US CAGR
+4%
EUR CAGR
+3%
GDP Growth
… Growth underpinned by strong fundamentals
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1970s
1980s
1930s
‘07
‘08
‘09 ‘10
‘11 ‘12
‘13 ‘14 ‘15
‘16
‘17 ‘18F
-75%
-50%
-25%
0%
0 1 2 3 4 5 6 7 8 9 10 11 12
% D
eclin
e f
rom
peak
Year
1973-1978 1979-1985 1929-1941 2006-2018F
Still some way to run in the cycle…
1970s 1980s 1990s
‘08
‘09
‘10 ‘11
‘12 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18F
-60%
-40%
-20%
0%
0 1 2 3 4 5 6 7 8 9 10 11
% D
eclin
e f
rom
peak
Year
1973-1980 1980-1989 1991-1998 2007-2018F
Source: Global Cement Report, US Geological Survey, PCA, UN, Morgan Stanley
Recovery in early stages…
Where are we in the recovery cycle... Our main markets
U.S. Europe
U.S. Cement Demand Europe Cement Demand
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€25bn Market Cap
€28bn
Revenue
€3.3bn EBITDA
85,000 Employees
2017
+124%
+87%
+53%
€13bn Market Cap
€18bn
Revenue
€1.5bn EBITDA
76,000 Employees
2013
Our Business Our Business… Our Business… Today
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... Strong markets … Significant room to grow ...
North America … #1 Building Materials Company
• Positive fundamentals
• Population growth and good demographics
• Funded infra programmes to drive investment
• Res / Non-res exposure in high-growth states
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Europe … #1 Heavyside Materials Company
• Largest economic bloc
• Growing population
• Solid developed markets in West
• Growth potential in East
… Recovery underway… Leverage to deliver…
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Heavyside (€2.2bn) EBITDA (€3.3bn) Lightside (€1.1bn)
Cement Aggregates Asphalt RMC Paving Glass Construction
Accessories
Servicing the Breadth of Construction
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Servicing the Breadth of Demand
2017 EBIT
Geography Sector End-Use
40% Residential
30% Infrastructure
30% Non-Residential
50% RMI
50% New Build
37% Europe
62% Americas
2017 Sales 2017 Sales
... Balance brings Industry-leading Returns and Cash generation
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1.5 1.6
2.2
3.1 3.3
1.2
1.7
2.2
2.7
3.2
3.7
2013 2014 2015 2016 2017
18.0
18.9
23.6
27.1 27.6
15
20
25
30
2013 2014 2015 2016 2017
Sales (€bn)
EBITDA (€bn)
CAGR
+11% CAGR
+22%
We have seen… strong growth in Sales and EBITDA …
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6%
7%
9%
10%
11%
5%
7%
9%
11%
2013 2014 2015 2016 2017
8%
9% 9%
12% 12%
7%
9%
11%
13%
2013 2014 2015 2016 2017
EBITDA % Returns %
+400 Bps +500 Bps
Returns = EBIT / Net Assets
… and improved Margins and Returns …
CRH plc, AGM 2018 14 FCF = EBITDA +/- WC movements – Interest - Tax
• Converting ~80% of profits into cash
• Generating €2bn+ cash p.a.
• ... before disposals 1.2 1.3
2.3 2.4 2.3
0.5
1.0
1.5
2.0
2.5
2013 2014 2015 2016 2017
€2bn
Free Cash Flow (€Bn)
… and have generated strong Cash Flows …
CRH plc, AGM 2018 15
~€4bn proceeds
from disposal…
Divestment targets exceeded …
… along with significant Cash from Disposals
CRH plc, AGM 2018 16
Significant cash generated in past 5 years…
… large acquisition spend…
… how have these acquisitions performed ?
CRH plc, AGM 2018 17
Heavyside
‘Bolt-ons’
~€6.5bn ~€0.5bn ~€1.2bn
We target returns of 10% by Year 3...
… New platforms established… enhanced delivery through ‘Bolt-ons’
Returns 10% +15% 13%
Acquisition spend ~€8bn in 2014-16
CRH plc, AGM 2018 18
The key drivers of Shareholder Value …
• Returns
• Cash Generated
How did CRH perform vs Industry ?
CRH plc, AGM 2018 19
4%
6%
8%
10%
2013 2014 2015 2016 2017
Source: Bloomberg
… Generating Industry-leading Returns …
Returns = EBIT / Net Assets
CRH
US Peers Global Peers
… Returns
CRH plc, AGM 2018 20
30%
50%
70%
90%
110%
2013 2014 2015 2016 2017
… Generating more Cash from Profits than Global and US Peers …
Source: Bloomberg
CRH US Peers
Global Peers
FCF = EBITDA +/- WC – Interest - Tax
… Cash Generated
FCF / EBITDA
CRH plc, AGM 2018 21
0
50
100
150
200
250
300
2013 2014 2015 2016 2017
CRH
FTSE100
How does this translate into Shareholder Value ?
CAGR
17.6%
9.5%
… Total Shareholder Returns well above FTSE 100 …
CRH plc, AGM 2018 23
Founded on 3 Core Principles
1. Relentless focus on Performance
• Co-ordinated & driven from the centre ... delivered locally
2. Growth
• Rigorous approach to M&A ... large & small deals
• Focussed on building integrated clusters of businesses
• Scalable acquisition model ... difficult to replicate
3. CRH – A Unique Business Model
• Extracts more value from businesses than if stand-alone
Delivering Sustainable, Superior Returns
CRH plc, AGM 2018 24
1. Rigorous approach to Capital Allocation
2. Active Portfolio Management
3. Co-ordinating Divisional Strategies
• Shaping the Group for future growth
• Transfer of best practices across Divisions
4. Setting Strategic Targets for Operations
• Demanding Margins, Returns and Cash Improvements year over year
CRH – A Unique Business Model… Driving Returns from the Centre
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1. Embedding CRH Continuous Business Improvement Processes
2. Co-ordinating Development and Strategy
3. Delivering Synergies on Integration
4. Mandating Process and Commercial Excellence across Divisions
5. Implementing Group-wide Procurement Programmes
6. Co-ordinating Customer and Market management
7. Driving value from Tax, Treasury, Insurance and other corporate processes
… Delivering the Scale Benefits of an Integrated Group …
CRH – A Unique Business Model… Driving Returns from the Centre
CRH plc, AGM 2018 26
Where to from here ?
CRH … 2018-2020
CRH plc, AGM 2018 27
U.S.
• Public Infra +3% p.a… Residential markets +4%
p.a… Non-Residential markets +2% p.a
• Funded infra programmes to drive investment
• Res / Non-res exposure in high-growth states
• Delivery on integration of ~$4bn acquisitions ...
~$135m synergies
• Positive price dynamics in the marketplace
Europe
• Recovery underway across European markets
• Expect demand to continue to build in the coming
years
• Pricing continuing to show signs of recovery
Asia
• Expect market stabilisation in 2018
How do we see our markets evolving (2018-20)
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• Relentless focus on Performance
• Disciplined Growth
• Continue to manage our Portfolio
• Value-focussed Capital Allocation policy
Commitment to continued improvement in shareholder returns
Our priorities going forward …
What to expect from CRH
• We will set out the scale of the ambition we
have for the Group in the years ahead, with a
focus on …
• Shareholder Value
• Cash Generation
• Capital Allocation Policy
In the coming months …