REG - CRH PLC - 2022 Full Year Results
02/03/2023 07:01
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RNS Number : 5818R CRH PLC 02 March 2023
2022 Full Year Results
This document contains inside information
Key Highlights
· Strong performance underpinned by our integrated solutions strategy
· Further growth in sales, EBITDA, margin & EPS despite significant
cost inflation
· Efficient & disciplined approach to capital allocation
· FY dividend +5%, significantly increasing share buyback to $3bn over
next 12 months
· $3.3bn invested in solutions-focused acquisitions; strong pipeline of
opportunities
· Strong & flexible balance sheet; significant optionality for
future value creation
· Raising sustainability ambitions; updated 1.5°C decarbonisation
targets
· New organisational structure; aligning with integrated solutions
strategy
· Recommending transition to US primary listing in 2023
Summary Financials(1) 2022
Change
Sales
$32.7bn +12%
EBITDA
$5.6bn +13%
EBITDA Margin 17.2%
+10bps
EPS
$3.50 +14%
Albert Manifold, Chief Executive, said today:
"Our 2022 performance reflects the outstanding commitment of our people, the
underlying strength and resilience of our business and the continued delivery
of our integrated, solutions-focused strategy. Despite significant cost
pressures throughout the year, we delivered further improvements in profits,
margins and returns. Our strong cash generation together with our relentless
focus on disciplined capital allocation has also delivered the strongest
balance sheet in our history, providing us with significant opportunities for
further growth and value creation going forward."
Announced Thursday, 2 March 2023
((1)) Current and prior year trading information is presented on a continuing
operations basis, excluding the results of the Building Envelope business
which was divested in April 2022 and has been classified within discontinued
operations.
2022 Full Year Results
Trading Overview
CRH delivered a strong performance in 2022 underpinned by our integrated
solutions strategy along with resilient demand and commercial progress in
North America and Europe. Group sales of $32.7 billion (2021: $29.2 billion)
were 12% ahead of 2021 on both a total and like-for-like basis(2). Group
EBITDA of $5.6 billion (2021: $5.0 billion) was 13% ahead as good commercial
management and further operational efficiencies offset significant cost
inflation, overall Group margin was also ahead of prior year. Like-for-like
EBITDA was 8% ahead of 2021.
· Americas Materials delivered a strong performance with total
sales 15% above 2021 levels and like-for-like sales 12% ahead driven primarily
by solid price progression across all lines of business. EBITDA was 6% ahead,
or 5% ahead on a like-for-like basis, as good commercial management partially
offset the impact of higher input costs and lower volumes resulting from
unfavourable weather.
· Building Products maintained good activity levels as demand for
critical utility infrastructure and outdoor living solutions remained
resilient. This, together with strong performances from recent acquisitions,
delivered total sales 26% ahead of 2021, or 11% ahead on a like-for-like
basis. Total EBITDA was 52% ahead, 18% ahead on a like-for-like basis, as a
result of continued progress on pricing, cost control and production
efficiencies.
· Europe Materials like-for-like sales were 11% ahead reflecting
continued strong pricing progress which offset the impact of lower activity
levels. Like-for-like EBITDA was 8% ahead, driven by commercial excellence
measures across all countries along with a continued focus on cost savings,
partly offset by significant cost inflation and the impact of the conflict in
Ukraine. Total sales were in line with 2021 and EBITDA was 4% behind due to
the impact of adverse currency translation effects.
Profit after tax from continuing operations was 10% ahead of 2021 at $2.7
billion (2021: $2.4 billion) driven primarily by the strong trading
performance.
Earnings per share (EPS) from continuing operations was 14% higher than 2021
at $3.50 (2021: $3.06). Including the trading contribution and profit on
disposal of our discontinued operations, total EPS was $5.07 (2021: $3.29).
Note 2 on page 15 analyses the key components of the 2022 performance.
Accelerating Integrated Solutions
Our 2022 performance reflects the continued delivery of our integrated
solutions strategy. By uniquely integrating value-added materials, products
and services across the construction project lifecycle, our strategy enables
us to provide bespoke solutions for our customers that solve their
increasingly complex construction needs, while also creating superior value
for our business. To further accelerate the development of our integrated
solutions strategy and align our business with the changing needs and future
growth opportunities of our industry, the Group has decided to transition to a
new organisational structure, effective from 1 January 2023(3). See Appendix 1
for further information and associated 2022 pro forma disclosures. Further
financial information will be provided in advance of our April trading update.
Sustainability
We remain committed to continuously improving our sustainability performance
and decarbonising our businesses. In 2022, we announced an industry leading
absolute carbon emissions reduction target by 2030. In early 2023, the Science
Based Targets initiative (SBTi) validated our revised targets in line with the
updated 1.5°C science-based framework, which now equate to a 30% reduction in
absolute carbon emissions by 2030 (from a 2021 base year). This is aligned
with our ambition to be a net-zero business by 2050. In addition, we continue
to expand our offering of integrated sustainable solutions to address the
needs of our customers, advancing circularity and innovating to create a more
sustainable built environment.
The Group has also recently announced the establishment of CRH Ventures, its
venture capital unit, which will support the development of new technologies
and innovative solutions to meet the increasingly complex needs of customers
and evolving trends in construction. With access to a $250 million venturing
and innovation fund to invest, CRH Ventures will partner with construction and
climate technology companies, operating across the construction value chain.
Trading Outlook
Overall, we expect resilient demand and increased pricing in 2023 despite
macroeconomic uncertainties and ongoing cost inflation. Our operations in
North America will benefit from strong pricing and robust infrastructure
demand being underpinned by significant increases in funding at both federal
and state level. The non-residential sector is supported by government funding
initiatives in clean energy and the onshoring of critical manufacturing, while
the residential new-build sector will experience short-term weakness as a
result of rising interest rates. In Europe we expect positive pricing momentum
to offset lower volumes. Construction activity in Central and Eastern Europe
will continue to be supported by EU infrastructure funds, while our businesses
in Western Europe remain underpinned by resilient repair, maintenance and
improvement (RMI) activity and stable infrastructure demand. Notwithstanding a
number of macroeconomic risks and uncertainties, CRH remains well positioned
for another year of progress in 2023 due to our uniquely integrated,
value-added solutions strategy together with a strong and flexible balance
sheet.
2 See pages 34 to 37 for glossary of alternative performance measures
(including EBITDA, like-for-like/organic, Net Debt/EBITDA) used throughout
this report.
3 Segmental information presented in the 2022 Financial Statements is based on
the segment structure as at 31 December 2022 being Americas Materials,
Building Products and Europe Materials.
Americas Materials
Analysis of change
$ million 2021 Exchange Acquisitions Divestments Organic 2022 % change
Sales revenue 12,407 -41 +511 -60 +1,507 14,324 +15%
EBITDA 2,588 -4 +44 -13 +133 2,748 +6%
Operating profit 1,788 -2 -11 -11 +145 1,909 +7%
EBITDA/sales 20.9% 19.2%
Operating profit/sales 14.4% 13.3%
Americas Materials sales were 15% ahead driven primarily by solid price
progression across all lines of business which was partly offset by lower
volumes impacted by unfavourable weather. EBITDA of $2.7 billion and operating
profit of $1.9 billion were 6% and 7% ahead of 2021 respectively, as positive
pricing was impacted by higher input costs. Like-for-like sales and EBITDA
were 12% and 5% ahead of 2021 respectively.
Construction market growth remained positive in 2022, primarily driven by
strong infrastructure activity, supported by increases in federal, state and
local transportation funding. The non-residential market remained resilient,
while parts of the new-build residential market faced challenges from rising
interest rates and affordability constraints. Canada experienced solid growth
in most provinces; however, rising interest rates and inflationary pressures
negatively impacted the residential market.
During 2022, Americas Materials completed ten solutions-focused acquisitions
across the US with a total spend of $0.5 billion. The largest of these was the
acquisition of Hinkle Contracting Company, a vertically integrated materials
and road solutions business in Kentucky.
Materials
Aggregates volumes declined by 1% compared to 2021 as strong volumes in the
South and Great Lakes divisions were offset by unfavourable weather which
impacted activity in the Northeast and West divisions. Aggregates prices
increased by 10%, driven by strong commercial management.
Asphalt volumes were 3% ahead, driven by increases in the Great Lakes and
South divisions, while volumes were lower in the Northeast and West divisions.
Asphalt prices increased by 20% compared to prior year.
Readymixed concrete volumes were 6% behind 2021 levels, impacted by less
favourable weather conditions in the West and the Northeast. Strong commercial
discipline delivered higher prices across all divisions, 14% ahead of 2021,
which offset raw materials and energy cost inflation.
Paving and construction revenues were 25% ahead of 2021 due to a strong order
book and good project execution.
Regional Performance
Sales in the Northeast division were 10% ahead of 2021 as prices improved
across all lines of business offsetting lower volumes due to less favourable
weather. Operating profit increased, driven by improved pricing which offset
lower volumes and higher input costs.
Great Lakes sales were 20% ahead of 2021, led by improved pricing across all
lines of business and solid construction demand. Growth in operating profit
was achieved through strong commercial management and ongoing cost control,
offsetting input cost inflation.
South division sales were 26% ahead of 2021 with volumes ahead of prior year.
Pricing was strong across all lines of business. Operating profit marginally
declined as strong pricing was offset by increases in energy and bitumen
costs.
The West division delivered 10% sales growth, driven primarily by disciplined
commercial management across all lines of business and strong construction
revenues. Unfavourable weather and a late start to the season impacted
volumes. Operating profit was slightly ahead of 2021 as lower volumes were
offset by improved pricing.
Cement
Our cement division delivered sales growth of 8% driven primarily by price
realisation of 12% which offset slightly lower volumes compared with 2021.
Operating profit was ahead driven by strong price progression amid an
inflationary cost environment.
Building Products (Continuing Operations)
Analysis of change
$ million 2021 Exchange Acquisitions Divestments Organic 2022 % change
Sales revenue 6,218 -167 +1,121 -4 +655 7,823 +26%
EBITDA 992 -7 +350 - +175 1,510 +52%
Operating profit 729 -1 +285 - +148 1,161 +59%
EBITDA/sales 16.0% 19.3%
Operating profit/sales 11.7% 14.8%
The table above excludes the trading performance of Building Envelope which,
following its divestment, has been classified within discontinued operations.
Building Products delivered sales growth of 26%, 11% ahead on a like-for-like
basis, due to strong demand for critical utility infrastructure and outdoor
living solutions. This, combined with continued strong cost control and
production efficiencies resulted in EBITDA 52% ahead of prior year and
operating profit 59% ahead, 18% ahead and 20% ahead respectively on a
like-for-like basis. This demonstrates the strong contribution from both the
underlying businesses and recent acquisitions underpinned by our integrated
solutions strategy.
Building Products completed ten acquisitions during 2022, mainly in the US,
for a total spend of c. $2.7 billion. The largest acquisition was the purchase
in July 2022 of Barrette Outdoor Living, North America's leading provider of
fencing and railing solutions for the outdoor living space.
Architectural Products
Architectural Products in North America delivered strong sales growth in 2022,
as sustained RMI activity offset the impact of rising interest rates on
certain parts of new-build residential construction activity. Underlying
demand in our European businesses was solid, particularly in Poland; however
total sales were slightly behind 2021 due to currency headwinds. Pricing
progress, improved operational performance and contributions from acquisitions
resulted in operating profit ahead of prior year in both North America and
Europe despite cost inflation and raw materials shortages. The integration of
Barrette Outdoor Living is progressing well with trading in line with
expectations and good synergy delivery.
Infrastructure Products
Infrastructure Products experienced strong sales growth in 2022, particularly
in North America, with robust demand in the communications, energy, water and
transportation sectors as well as strong contributions from recent
acquisitions. This resulted in operating profit well ahead of prior year as
higher activity levels combined with pricing progress and disciplined cost
control offset higher energy and materials costs, as well as labour market
constraints.
Construction Accessories
Proactive pricing actions by our Construction Accessories business resulted in
sales ahead of prior year across all regions, with growth primarily driven by
the UK, Germany and North America. Operating profit finished well ahead of
prior year as commercial excellence measures successfully mitigated the impact
of cost inflation.
Building Envelope (Discontinued Operations)
The commentary below refers to the trading results of Building Envelope, prior
to its divestment in April 2022, compared to the same period in 2021.
Building Envelope delivered sales growth driven by C.R. Laurence and the
aluminium glazing business. EBITDA was ahead of 2021 as a result of increased
sales and margin expansion achieved through operating efficiencies.
Europe Materials
Analysis of change
$ million 2021 Exchange Acquisitions Divestments Organic 2022 % change
Sales revenue 10,581 -1,151 +107 -44 +1,083 10,576 -
EBITDA 1,410 -157 +8 -4 +100 1,357 -4%
Operating profit 814 -79 +1 -2 +90 824 +1%
EBITDA/sales 13.3% 12.8%
Operating profit/sales 7.7% 7.8%
Europe Materials benefited from commercial management initiatives across all
countries, which, along with a continued focus on cost savings, helped to
mitigate significant energy and other input cost inflation, as well as the
impact of the conflict in Ukraine. Like-for-like sales were 11% ahead
reflecting continued strong pricing progress which offset the impact of lower
activity levels. In 2022, EBITDA was $1.4 billion, 8% ahead on a like-for-like
basis and operating profit was $0.8 billion, 12% ahead like-for-like.
Unfavourable currency translation effects resulted in total sales in line with
2021, EBITDA -4% behind, and operating profit 1% ahead.
UK & Ireland
UK & Ireland sales and operating profit were well ahead of 2021 driven by
strong pricing and ongoing performance optimisation initiatives. In the UK,
aggregates and asphalt volumes were behind prior year due to lower paving
activity, while readymixed concrete volumes benefited from an increase in
project activity. Ireland primarily benefited from improved construction
activity and pricing progress.
Europe North
Sales in Europe North (Finland, Germany and Switzerland) were in line with
2021 driven mainly by price increases which offset lower volumes, and a strong
performance in our lime business. Like-for-like operating profit ended ahead
of 2021 as improved pricing and cost savings actions compensated for an
inflationary and volatile energy cost environment.
Europe West
Europe West (France, Benelux, Denmark and Spain) delivered sales slightly
below 2021 due to softening volumes. Higher raw materials, energy and freight
costs in all countries were offset by higher pricing, which, along with
continued cost saving actions and commercial initiatives, saw like-for-like
operating profit ahead of 2021.
Europe East
Sales in Europe East (Poland, Ukraine, Romania, Hungary, Slovakia, Serbia, and
Croatia) were ahead of prior year due to a strong focus on commercial actions
to offset significant cost inflation. Poland, in particular, delivered sales
and operating profit strongly ahead of 2021. Activity levels in Ukraine were
impacted by the ongoing conflict and we continue to prioritise the support of
our employees during this challenging time. Total operating profit in Europe
East was behind prior year.
Asia
Sales in the Philippines ended the year behind 2021. Construction activity was
impacted by a pre-election ban on construction and high cost inflation which
slowed large infrastructure project activity. Price increases largely offset
weaker volumes; however, operating profit was impacted by high energy and
transportation costs which resulted in operating profit significantly below
2021.
CRH's operations include a 26% stake in Yatai Building Materials (reported
within the Group's share of equity accounted investments) in China where the
government's COVID-19 restrictions impacted many areas of the economy,
including the construction sector. This resulted in sales and operating profit
below 2021.
Other Financial Items
Depreciation and amortisation charges amounted to $1.7 billion, in line with
prior year (2021: $1.7 billion).
Divestments and asset disposals from continuing operations generated a total
loss on disposals of $49 million (2021: $116 million profit). Profit after tax
on the divestment of the Building Envelope business amounted to $1.1 billion
and is included in profit after tax from discontinued operations.
Net finance costs of $376 million were lower than 2021 (2021: $399 million)
primarily as a result of higher interest income and lower debt levels
offsetting increased interest expense driven by higher rates.
The Group's share of profit from equity accounted investments was $nil (2021:
$55 million), primarily driven by the performance of the Group's associate in
China where activity levels were impacted by COVID-19 restrictions.
Profit before tax was $3.5 billion (2021: $3.1 billion), and the associated
tax charge of $785 million (2021: $661 million) represented an effective tax
rate of 22.6% (2021: 21.3%) on profit before tax, which was higher than prior
year due to the tax impact of divestments.
Dividend
In addition to the interim dividend of $0.24 (2021: $0.23) per share which was
paid in October 2022, the Board is recommending a final dividend of $1.03 per
share. This would result in a total dividend of $1.27 for the year (2021:
$1.21), an increase of 5.0% over 2021, in line with the Group's progressive
dividend policy. Based on the EPS from continuing operations for the year this
represents a dividend cover of 2.8x. It is proposed to pay the final dividend
on 4 May 2023 to shareholders registered at close of business on 17 March
2023. The ex-dividend date will be 16 March 2023. The final dividend will be
paid wholly in cash.
Share Buyback Programme
Reflecting our strong financial position and commitment to returning cash to
shareholders, the Group continued its ongoing share buyback programme in 2022
repurchasing 29.8 million (2021: 17.8 million) ordinary shares for a total
consideration of $1.2 billion (2021: $0.9 billion).
Our strong financial position and cash generation capabilities provides us
with the opportunity to increase our cash returns to shareholders, while at
the same time continuing to invest in our business and execute our strategic
growth initiatives. Having carefully considered our near-term capital
allocation opportunities, we intend to substantially increase our share
buyback programme through the repurchase of up to $3 billion of CRH shares
over the next 12 months(4).
Consistent with the Group's disciplined approach to capital allocation, 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. We remain committed to our
progressive dividend policy and our strong investment grade credit rating.
Balance Sheet and Liquidity
2022 marked another year of strong cash generation for the Group with net cash
inflow from operating activities of $4.0 billion (2021: $4.2 billion).
Excluding higher tax outflows related to the Building Envelope divestment
($0.4 billion) net cash inflow from operating activities was higher than 2021
despite the impact of significant cost inflation on working capital. Year-end
net debt of $5.1 billion (2021: $6.3 billion) reflects healthy inflows from
operations, proceeds from the Building Envelope divestment, disciplined
capital expenditure and value focused investments. Net debt to EBITDA was 0.9x
(2021: 1.3x).
The Group ended 2022 with $5.9 billion of cash and cash equivalents on hand
and $3.7 billion of undrawn committed facilities which are available until
2026. At year end, the Group had sufficient cash balances to meet all maturing
debt obligations (including leases) for the next five years and the weighted
average maturity of the remaining term debt was 12.2 years. The Group also has
a $2.0 billion US Dollar Commercial Paper Programme and a €1.5 billion Euro
Commercial Paper Programme of which there were no outstanding issued notes at
year end. The Group continues to maintain its robust balance sheet and a
strong investment grade credit rating with a BBB+ or equivalent rating with
each of the three main rating agencies.
Investments and Divestments
In 2022 the Group invested $3.3 billion on 29 acquisitions (including deferred
and contingent consideration in respect of prior year acquisitions). On the
divestment front, the Group completed nine transactions and realised total
business and asset disposal proceeds(5) of $3.9 billion, primarily relating to
the proceeds from the Building Envelope divestment.
Investments and Acquisitions
The largest acquisition in 2022 was in our Building Products Division where
the Group completed its $1.9 billion acquisition of Barrette Outdoor Living,
North America's leading provider of fencing and railing solutions. This
acquisition complements and enhances our offering of sustainable outdoor
living solutions in North America. In addition, Building Products completed a
further seven acquisitions in the US and two in Europe, amounting to a total
spend of c. $2.7 billion. The Americas Materials Division completed ten
solutions-focused acquisitions in the US for a total spend of $0.5 billion,
and the Europe Materials Division completed nine bolt-on acquisitions for $0.1
billion, the largest of which was the acquisition of a precast business in
Denmark.
Divestments and Disposals
The largest divestment in 2022 was the Building Envelope business for cash
proceeds of $3.5 billion (enterprise value of $3.8 billion including lease
liabilities transferred of $0.3 billion). A further eight divestments were
completed across the Group, realising total proceeds of $0.2 billion. In
addition to these business divestments, the Group realised proceeds of $0.1
billion from the disposal of surplus property, plant and equipment and other
non-current assets.
4 In accordance with the applicable authority considered annually by
shareholders to repurchase CRH ordinary shares.
5 Net of cash disposed and including deferred consideration proceeds in
respect of prior year divestments.
Listing Considerations
Through the active reshaping and repositioning of CRH's business over the last
decade, North America now represents approximately 75% of Group EBITDA. 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.
We communicate frequently with our stakeholders regarding our future strategy,
our portfolio of businesses and how we keep our listing arrangements regularly
under review.
We have now come to the conclusion that a US primary listing would bring
increased commercial, operational and acquisition opportunities for CRH,
further accelerating our successful integrated solutions strategy and
delivering even higher levels of profitability, returns and cash for our
shareholders.
In the coming weeks we will outline to our shareholders why we are
recommending that it is in the best interests of our business and our
shareholders to pursue a primary listing of CRH, together with US equity
index inclusion as soon as possible.
This change in listing structure will have no impact on CRH plc, which will
remain headquartered, incorporated and tax-resident in Ireland.
We will provide a further update as part of our trading statement on Wednesday
26 April 2023.
Primary Financial Statements
and
Summarised Notes
Year ended 31 December 2022
Consolidated Income Statement
for the financial year ended 31 December 2022
Restated (i)
2022 2021
$m $m
Revenue 32,723 29,206
Cost of sales (21,844) (19,350)
Gross profit 10,879 9,856
Operating costs (6,985) (6,525)
Group operating profit 3,894 3,331
(Loss)/profit on disposals (49) 116
Profit before finance costs 3,845 3,447
Finance costs (401) (357)
Finance income 65 -
Other financial expense (40) (42)
Share of equity accounted investments' profit - 55
Profit before tax from continuing operations 3,469 3,103
Income tax expense (785) (661)
Group profit for the financial year from continuing operations 2,684 2,442
Profit after tax for the financial year from discontinued operations 1,190 179
Group profit for the financial year 3,874 2,621
Profit attributable to:
Equity holders of the Company
From continuing operations 2,657 2,386
From discontinued operations 1,190 179
Non-controlling interests
From continuing operations 27 56
Group profit for the financial year 3,874 2,621
Basic earnings per Ordinary Share $5.07 $3.29
Diluted earnings per Ordinary Share $5.03 $3.26
Basic earnings per Ordinary Share from continuing operations $3.50 $3.06
Diluted earnings per Ordinary Share from continuing operations $3.48 $3.03
(i) Restated to show the results of our former Building Envelope
business in discontinued operations. See note 8 for further details.
Consolidated Statement of Comprehensive Income
for the financial year ended 31 December 2022
2022 2021
$m $m
Group profit for the financial year 3,874 2,621
Other comprehensive income
Items that may be reclassified to profit or loss in subsequent years:
Currency translation effects (641) (338)
Gains relating to cash flow hedges 66 34
Tax relating to cash flow hedges (14) (8)
(589) (312)
Items that will not be reclassified to profit or loss in subsequent years:
Remeasurement of retirement benefit obligations 279 264
Tax relating to retirement benefit obligations (63) (36)
216 228
Total other comprehensive income for the financial year (373) (84)
Total comprehensive income for the financial year 3,501 2,537
Attributable to:
Equity holders of the Company 3,520 2,516
Non-controlling interests (19) 21
Total comprehensive income for the financial year 3,501 2,537
Consolidated Balance Sheet
as at 31 December 2022
2022 2021
$m $m
ASSETS
Non-current assets
Property, plant and equipment 18,921 19,502
Intangible assets 10,287 9,848
Investments accounted for using the equity method 649 653
Other financial assets 14 12
Other receivables 164 239
Retirement benefit assets 261 166
Derivative financial instruments 3 97
Deferred income tax assets 88 109
Total non-current assets 30,387 30,626
Current assets
Inventories 4,194 3,611
Trade and other receivables 4,569 4,569
Current income tax recoverable 63 42
Derivative financial instruments 39 39
Cash and cash equivalents 5,936 5,783
Total current assets 14,801 14,044
Total assets 45,188 44,670
EQUITY
Capital and reserves attributable to the Company's equity holders
Equity share capital 302 309
Preference share capital 1 1
Treasury Shares and own shares (297) (195)
Other reserves 380 445
Cash flow hedging reserve 5 -
Foreign currency translation reserve (692) (97)
Retained income 21,992 19,770
Capital and reserves attributable to the Company's equity holders 21,691 20,233
Non-controlling interests 646 681
Total equity 22,337 20,914
LIABILITIES
Non-current liabilities
Lease liabilities 1,059 1,374
Interest-bearing loans and borrowings 8,145 9,938
Derivative financial instruments 77 -
Deferred income tax liabilities 2,868 2,734
Other payables 691 717
Retirement benefit obligations 277 475
Provisions for liabilities 845 937
Total non-current liabilities 13,962 16,175
Current liabilities
Lease liabilities 260 297
Trade and other payables 5,872 5,692
Current income tax liabilities 702 550
Interest-bearing loans and borrowings 1,491 549
Derivative financial instruments 51 14
Provisions for liabilities 513 479
Total current liabilities 8,889 7,581
Total liabilities 22,851 23,756
Total equity and liabilities 45,188 44,670
Consolidated Statement of Changes in Equity
for the financial year ended 31 December 2022
Attributable to the equity holders of the Company
Issued Share Treasury Other Cash flow hedging reserve Foreign Retained Non- Total
share premium Shares/ reserves $m currency income controlling equity
capital account own $m translation $m interests $m
$m $m shares reserve $m
$m $m
At 1 January 2022 310 - (195) 445 - (97) 19,770 681 20,914
Group profit for the financial year - - - - - - 3,847 27 3,874
Other comprehensive income - - - - 66 (595) 202 (46) (373)
Total comprehensive income - - - - 66 (595) 4,049 (19) 3,501
Reclassifications - - - - 35 - (35) - -
Share-based payment expense - - - 101 - - - - 101
Shares acquired by CRH plc (Treasury Shares) - - (1,170) - - - 17 - (1,153)
Treasury Shares/own shares reissued - - 24 - - - (24) - -
Shares acquired by Employee Benefit Trust (own shares) - - (8) - - - - - (8)
Shares distributed under the Performance Share Plan Awards - - 173 (173) - - - - -
Cancellation of Treasury Shares (7) - 879 7 - - (879) - -
Hedging gains transferred to inventory - - - - (96) - - - (96)
Tax relating to cash flow hedges - - - - - - 17 - 17
Tax relating to share-based payment expense - - - - - - (3) - (3)
Share option exercises - - - - - - 11 - 11
Dividends - - - - - - (931) (13) (944)
Transactions involving non-controlling interests - - - - - - - (3) (3)
At 31 December 2022 303 - (297) 380 5 (692) 21,992 646 22,337
for the financial year ended 31 December 2021
At 1 January 2021 334 7,493 (386) 444 - 206 11,565 692 20,348
Group profit for the financial year - - - - - - 2,565 56 2,621
Other comprehensive income - - - - - (303) 254 (35) (84)
Total comprehensive income - - - - - (303) 2,819 21 2,537
Share-based payment expense - - - 110 - - - - 110
Shares acquired by CRH plc (Treasury Shares) - - (880) - - - (281) - (1,161)
Treasury Shares/own shares reissued - - 19 - - - (19) - -
Shares acquired by Employee Benefit Trust (own shares) - - (16) - - - - - (16)
Shares distributed under the Performance Share Plan Awards - - 117 (117) - - - - -
Reduction in Share Premium - (7,493) - - - - 7,493 - -
Cancellation of Income Shares (16) - - - - - 16 - -
Cancellation of Treasury Shares (8) - 951 8 - - (951) - -
Tax relating to share-based payment expense - - - - - - 24 - 24
Share option exercises - - - - - - 13 - 13
Dividends - - - - - - (909) (32) (941)
At 31 December 2021 310 - (195) 445 - (97) 19,770 681 20,914
Consolidated Statement of Cash Flows
for the financial year ended 31 December 2022
Restated (i)
2022 2021
$m $m
Cash flows from operating activities
Group profit for the financial year 3,874 2,621
Finance costs (net) 382 417
Share of equity accounted investments' profit - (55)
Profit on disposals (1,422) (119)
Depreciation charge 1,644 1,691
Amortisation of intangible assets 113 74
Share-based payment expense 101 110
Income tax expense 1,155 721
Other 42 21
Net movement in inventories, receivables, payables and provisions (518) (228)
Cash generated from operations 5,371 5,253
Interest paid (including leases) (374) (401)
Corporation tax paid (1,043) (642)
Net cash inflow from operating activities 3,954 4,210
Cash flows from investing activities
Proceeds from disposals (net of cash disposed and deferred proceeds) 3,827 387
Interest received 65 -
Dividends received from equity accounted investments 36 32
Purchase of property, plant and equipment (1,523) (1,554)
Acquisition of subsidiaries (net of cash acquired) (3,253) (1,494)
Other investments and advances (45) (4)
Net cash flow arising from derivative financial instruments (11) -
Deferred and contingent acquisition consideration paid (32) (33)
Deferred divestment consideration received 52 120
Net cash outflow from investing activities (884) (2,546)
Cash flows from financing activities
Proceeds from exercise of share options 11 13
Transactions involving non-controlling interests (3) -
Increase in interest-bearing loans and borrowings 38 -
Net cash flow arising from derivative financial instruments (11) (37)
Repayment of interest-bearing loans and borrowings (364) (1,183)
Repayment of lease liabilities (ii) (249) (264)
Treasury Shares/own shares purchased (1,178) (896)
Dividends paid to equity holders of the Company (917) (906)
Dividends paid to non-controlling interests (13) (32)
Net cash outflow from financing activities (2,686) (3,305)
Increase/(decrease) in cash and cash equivalents 384 (1,641)
Reconciliation of opening to closing cash and cash equivalents
Cash and cash equivalents at 1 January 5,783 7,721
Translation adjustment (231) (297)
Increase/(decrease) in cash and cash equivalents 384 (1,641)
Cash and cash equivalents at 31 December 5,936 5,783
(i) See the Basis of Preparation and Accounting Policies on page 14
for further details.
(ii) Repayment of lease liabilities amounted to $297 million (2021:
$328 million), of which $48 million (2021: $64 million) related to interest
paid which is presented in cash flows from operating activities.
Supplementary Information
Selected Explanatory Notes to the Consolidated Financial Statements
1. Basis of Preparation and Accounting Policies
Basis of Preparation
The financial information presented in this report has been prepared in
accordance with the Group's accounting policies under International Financial
Reporting Standards (IFRS) as adopted by the European Union and as issued by
the International Accounting Standards Board (IASB).
Certain prior year disclosures have been amended to conform to current year
presentation. An amount of $46 million relating to the unwinding of the
discount element of lease liabilities has been reclassified from other
financial expense to finance costs in the period ended 31 December 2021 to
align with current year presentation. This has no impact on total net finance
costs or any other financial statement line items for any of the periods
presented.
Adoption of IFRS and International Financial Reporting Interpretations
Committee (IFRIC) interpretations
The following standard amendments became effective for the Group as of 1
January 2022:
· Amendments to IFRS 3 Business Combinations - Reference to the
Conceptual Framework
· Amendments to IAS16 Property, Plant and Equipment - Proceeds before
Intended Use
· Amendments to IAS 37 Provisions, Contingent Liabilities and
Contingent Assets - Onerous Contracts - Costs of Fulfilling a Contract
· Annual Improvements 2018 - 2020 Cycle
The standard amendments did not result in a material impact on the Group's
results.
Voluntary Change in Accounting Policy
For the period ended 31 December 2022, the Group retrospectively adopted a
voluntary change in accounting policy in accordance with IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors with respect to the
presentation of operating cash flows under IAS 7 Statement of Cash Flows. The
impact of this change is to replace "Profit before tax" with "Group profit for
the financial year" as the starting point for the reconciliation to net cash
flows from operating activities in the Consolidated Statement of Cash Flows.
The new presentation reconciles net cash flows from operating activities on a
total Group basis, including both continuing and discontinued operations. This
has no impact on net cash inflow from operating activities or any other
financial statement line items for any of the periods presented.
Translation of Foreign Currencies
The financial information is presented in US Dollar millions. Results and cash
flows of operations with non-US Dollar functional currencies have been
translated into US Dollar at average exchange rates for the year, and the
related balance sheets have been translated at the rates of exchange in effect
at the balance sheet date. The principal rates used for the translation of
results, cash flows and balance sheets into US Dollar were:
Average Year end
US Dollar 1 = 2022 2021 2022 2021
Brazilian Real 5.1648 5.3968 5.2794 5.5716
Canadian Dollar 1.3017 1.2538 1.3535 1.2716
Chinese Renminbi 6.7334 6.4493 6.8987 6.3513
Danish Krone 7.0805 6.2919 6.9662 6.5652
Euro 0.9518 0.8460 0.9368 0.8829
Hungarian Forint 373.1682 303.3739 375.1400 325.9300
Indian Rupee 78.6295 73.9391 82.7211 74.3009
Philippine Peso 54.5318 49.2983 55.7290 50.9800
Polish Zloty 4.4631 3.8633 4.3881 4.0579
Pound Sterling 0.8120 0.7270 0.8310 0.7417
Romanian Leu 4.6930 4.1641 4.6357 4.3692
Serbian Dinar 111.7836 99.4732 109.8553 103.7590
Swiss Franc 0.9551 0.9145 0.9230 0.9119
Ukrainian Hryvnia 32.6730 27.2588 36.9172 27.2850
2. Key Components of 2022 Performance
Continuing operations
$ million Sales revenue EBITDA Operating profit Profit/(loss) on disposals Finance costs (net) Assoc. and JV PAT (i) Pre-tax profit
2021 29,206 4,990 3,331 116 (399) 55 3,103
Exchange effects (1,359) (168) (82) (2) 19 (3) (68)
2021 at 2022 rates 27,847 4,822 3,249 114 (380) 52 3,035
Incremental impact in 2022 of:
2021/2022 acquisitions 1,739 402 275 - (55) - 220
2021/2022 divestments (108) (17) (13) (177) 47 - (143)
Organic 3,245 408 383 14 12 (52) 357
2022 32,723 5,615 3,894 (49) (376) - 3,469
% Total change 12% 13% 17% 12%
% Organic change 12% 8% 12% 12%
(i) CRH's share of after-tax results of joint ventures and
associated undertakings.
3. Seasonality
Activity in the construction industry is characterised by cyclicality and is
dependent to a considerable extent on the seasonal impact of weather in the
Group's operating locations, with activity in some markets reduced
significantly in winter due to inclement weather. First‑half sales accounted
for 46% of full-year 2022 (2021: 45%), while EBITDA for the first six months
of 2022 represented 39% of the full-year out-turn (2021: 36%).
4. Revenue
A. Disaggregated revenue
In the following tables, revenue is disaggregated by primary geographic market
and by principal activities and products. Due to the diversified nature of the
Group, the basis on which management reviews its businesses varies across the
Group. Geography is the primary basis for the Americas Materials and Europe
Materials businesses; while activities and products are used for the Building
Products businesses.
Revenue from external customers (as defined in IFRS 8 Operating Segments)
attributable to the country of domicile and all foreign countries of operation
greater than 10% are included below. Further operating segment disclosures are
set out in note 5.
Year ended 31 December
Americas Materials Building Products Europe Materials Total Americas Materials Building Products Europe Materials Total
2022 2022 2022 2022 2021 2021 2021 2021
$m $m $m $m $m $m $m $m
Primary geographic markets
Continuing operations
Republic of Ireland (country of domicile) - - 801 801 - - 706 706
United Kingdom - 238 4,003 4,241 - 220 3,979 4,199
Rest of Europe (i) - 1,074 5,219 6,293 - 1,073 5,243 6,316
United States 13,050 6,038 - 19,088 11,172 4,446 - 15,618
Rest of World (ii) 1,274 473 553 2,300 1,235 479 653 2,367
Total Group from continuing operations 14,324 7,823 10,576 32,723 12,407 6,218 10,581 29,206
Discontinued operations
United Kingdom - Building Envelope - 7 - 7 - 24 - 24
Rest of Europe (i) - Building Envelope - 4 - 4 - 12 - 12
United States - Building Envelope - 576 - 576 - 1,575 - 1,575
Rest of World (ii) - Building Envelope - 58 - 58 - 164 - 164
Total Group from discontinued operations - 645 - 645 - 1,775 - 1,775
Footnotes (i) and (ii) appear on page 17.
4. Revenue - continued
Year ended 31 December
Americas Materials BuildingProducts Europe Materials Total Americas Materials Building Products Europe Materials Total
(iii) (iii) (iii) (iii)
2022 2022 2022 2022 2021 2021 2021 2021
$m $m $m $m $m $m $m $m
Principal activities and products
Continuing operations
Cement, lime and cement products 1,554 - 3,481 5,035 1,483 - 3,463 4,946
Aggregates, asphalt and readymixed products 6,979 - 3,515 10,494 6,262 - 3,606 9,868
Construction contract activities* 5,791 88 2,101 7,980 4,662 92 2,065 6,819
Architectural products - 4,409 1,308 5,717 - 3,790 1,264 5,054
Infrastructure products - 2,531 171 2,702 - 1,605 183 1,788
Construction accessories - 795 - 795 - 731 - 731
Total Group from continuing operations 14,324 7,823 10,576 32,723 12,407 6,218 10,581 29,206
Discontinued operations
Construction contract activities* - Building Envelope - 16 - 16 - 83 - 83
Architectural glass and glazing systems and related hardware - Building - 629 - 629 - 1,692 - 1,692
Envelope
Total Group from discontinued operations - 645 - 645 - 1,775 - 1,775
* Revenue principally recognised over time. Construction contracts are
generally completed within the same financial reporting year.
Footnotes to revenue disaggregation on pages 16 & 17
(i) The Rest of Europe principally includes Austria, Belgium, Czech
Republic, Denmark, Estonia, Finland, France, Germany, Hungary, Luxembourg, the
Netherlands, Poland, Romania, Serbia, Slovakia, Spain, Sweden, Switzerland and
Ukraine.
(ii) The Rest of World principally includes Australia, Brazil, Canada
and the Philippines.
(iii) Americas Materials and Europe Materials both operate vertically
integrated businesses, which are founded in resource-backed cement and
aggregates assets and which support the manufacture and supply of aggregates,
asphalt, cement, readymixed and precast concrete and landscaping products.
Accordingly, for the purpose of disaggregation of revenue we have included
certain products together, as this is how management reviews and evaluates
this business line.
B. Unsatisfied long-term construction contracts and other performance
obligations
Revenue yet to be recognised from long-term construction contracts, primarily
within our Americas Materials and Europe Materials businesses, amounted to
$3,742 million at 31 December 2022 (2021: $3,177 million). The Group has
applied the practical expedient set out in IFRS 15 Revenue from Contracts with
Customers whereby revenue yet to be recognised on contracts that had an
original expected duration of less than one year is not disclosed. The
majority of open contracts at 31 December 2022 will close and revenue will be
recognised within 12 months of the balance sheet date.
5. Segment Information
Effective 1 January 2023 the Group restructured into two Divisions, CRH
Americas and CRH Europe. During the first quarter of 2023, the Group's
reportable segments increased from three to the following four segments:
Americas Materials Solutions, Americas Building Solutions, Europe Materials
Solutions and Europe Building Solutions. This realignment reflects the way
resources are allocated and performance is assessed by the Chief Operating
Decision Maker.
In the Group's financial reporting for 2023 comparative information for 2021
and 2022 will be restated to reflect the changes in reportable segments. The
segmental information presented is based on the segment structure as at 31
December 2022 being Americas Materials, Building Products and Europe
Materials.
The change in segment reporting post year end does not have a financial impact
on the Group's Consolidated Financial Statements.
2022 2021
$m % $m %
Revenue
Continuing operations
Americas Materials 14,324 43.8 12,407 42.5
Building Products 7,823 23.9 6,218 21.3
Europe Materials 10,576 32.3 10,581 36.2
Total Group from continuing operations 32,723 100.0 29,206 100.0
Discontinued operations
Building Products - Building Envelope 645 1,775
Total Group from discontinued operations 645 1,775
EBITDA
Continuing operations
Americas Materials 2,748 48.9 2,588 51.9
Building Products 1,510 26.9 992 19.9
Europe Materials 1,357 24.2 1,410 28.2
Total Group from continuing operations 5,615 100.0 4,990 100.0
Discontinued operations
Building Products - Building Envelope 131 360
Total Group from discontinued operations 131 360
Depreciation, amortisation and impairment
Continuing operations
Americas Materials 839 48.7 800 48.2
Building Products 349 20.3 263 15.9
Europe Materials 533 31.0 596 35.9
Total Group from continuing operations 1,721 100.0 1,659 100.0
Group Operating profit
Continuing operations
Americas Materials 1,909 49.0 1,788 53.7
Building Products 1,161 29.8 729 21.9
Europe Materials 824 21.2 814 24.4
Total Group from continuing operations 3,894 100.0 3,331 100.0
5. Segment Information - continued
2022 2021
$m $m
Reconciliation of Group operating profit to profit before tax:
Continuing operations
Group operating profit 3,894 3,331
(Loss)/profit on disposals (i) (49) 116
Profit before finance costs 3,845 3,447
Finance costs less income (336) (357)
Other financial expense (40) (42)
Share of equity accounted investments' profit - 55
Profit before tax from continuing operations 3,469 3,103
(i) (Loss)/profit on disposals
Americas Materials 38 126
Building Products 3 (27)
Europe Materials (90) 17
Total Group from continuing operations (49) 116
2022 2021
$m % $m %
Total assets
Americas Materials 17,609 45.8 17,064 45.0
Building Products 9,165 23.9 8,504 22.4
Europe Materials 11,622 30.3 12,367 32.6
Subtotal 38,396 100.0 37,935 100.0
Reconciliation to total assets as reported in the Consolidated Balance Sheet:
Investments accounted for using the equity method 649 653
Other financial assets 14 12
Derivative financial instruments (current and non-current) 42 136
Income tax assets (current and deferred) 151 151
Cash and cash equivalents 5,936 5,783
Total assets as reported in the Consolidated Balance Sheet 45,188 44,670
Total liabilities
Americas Materials 3,227 33.9 3,292 33.0
Building Products 2,045 21.5 2,579 25.9
Europe Materials 4,245 44.6 4,100 41.1
Subtotal 9,517 100.0 9,971 100.0
Reconciliation to total liabilities as reported in the Consolidated Balance
Sheet:
Interest-bearing loans and borrowings (current and non-current) 9,636 10,487
Derivative financial instruments (current and non-current) 128 14
Income tax liabilities (current and deferred) 3,570 3,284
Total liabilities as reported in the Consolidated Balance Sheet 22,851 23,756
6. Earnings per Ordinary Share
The computation of basic and diluted earnings per Ordinary Share is set out
below:
2022 2021
$m $m
Numerator computations
Group profit for the financial year 3,874 2,621
Profit attributable to non-controlling interests (27) (56)
Profit attributable to ordinary equity holders of the Company - numerator for 3,847 2,565
basic/diluted earnings per Ordinary Share
Profit after tax for the financial year from discontinued operations - 1,190 179
attributable to equity holders of the Company
Profit attributable to ordinary equity holders of the Company - numerator for 2,657 2,386
basic/diluted earnings per Ordinary Share from continuing operations
Number of Number of
Shares shares
Denominator computations
Weighted average number of Ordinary Shares (millions) outstanding for the year 758.3 780.2
Effect of dilutive potential Ordinary Shares (employee share awards) 5.8 6.6
(millions)
Denominator for diluted earnings per Ordinary Share 764.1 786.8
Earnings per Ordinary Share
- basic $5.07 $3.29
- diluted $5.03 $3.26
Earnings per Ordinary Share from continuing operations
- basic $3.50 $3.06
- diluted $3.48 $3.03
7. Dividends
2022 2021
Net dividend paid per share $1.22 $1.16
Net dividend declared for the year $1.27 $1.21
Dividend cover - continuing operations 2.8x 2.5x
The Board is recommending a final dividend of $1.03 per share. This would give
a total dividend of $1.27 for the year (2021: $1.21), an increase of 5% over
last year.
Existing currency elections and currency payment defaults will remain in place
unless revoked or otherwise amended by certificated shareholders. Therefore,
the final dividend will be paid in euro, Pound Sterling and US Dollar to
shareholders in accordance with their existing payment instructions. If no
such instructions are in place, the currency for dividend payments will be
based on shareholders' addresses on CRH's Share Register, or will, in the case
of shares held in the Euroclear Bank system, continue to be paid automatically
in euro, unless a currency election is made for the final dividend. Investors
holding CREST Depositary Interests (CDIs) should refer to the CREST
International Service Description. In respect of the final dividend, the
latest date for receipt of currency elections (and DWT exemption forms) is 31
March 2023. Earlier closing dates may apply to holders in Euroclear Bank and
in CREST.
If shareholders receive dividend payments in euro or Pound Sterling, the
exchange rate is expected to be set on Thursday, 20 April 2023.
8. Assets Held for Sale and Discontinued Operations
A. Profit on disposal of discontinued operations
In April 2022, the Group completed the divestment of its Building Envelope
business, formerly part of our Building Products segment. With the exception
of our Building Envelope business, no other businesses divested during 2022
are considered to be either separate major lines of business or geographical
areas of operation and therefore do not constitute discontinued operations as
defined in IFRS 5 Non-Current Assets Held for Sale and Discontinued
Operations.
No businesses met the IFRS 5 held for sale criteria at 31 December 2022.
The table below sets out the proceeds and related profit recognised on
divestment which were included in profit after tax for the financial year from
discontinued operations.
2022
$m
Assets/(liabilities) disposed of at net carrying amount:
- non-current assets* 2,016
- cash and cash equivalents 27
- inventories, receivables, payables and provisions 406
- lease liabilities (338)
- interest-bearing loans and borrowings (6)
- deferred tax (42)
- retirement benefit obligations (14)
Net assets disposed 2,049
Reclassification of currency translation effects on disposal 5
Total 2,054
Proceeds from disposal (net of disposal costs) 3,525
Profit on disposal from discontinued operations 1,471
Net cash inflow arising on disposal
Proceeds from disposal from discontinued operations 3,525
Less: cash and cash equivalents disposed (27)
Total 3,498
*Non-current assets comprise property, plant and equipment, intangible assets
and investments accounted for using the equity method.
8. Assets Held for Sale and Discontinued Operations - continued
B. Results of discontinued operations
The results of the discontinued operations included in the Group profit for
the financial year are set out as follows:
2022 2021
$m $m
Revenue 645 1,775
Cost of sales (i) (412) (1,143)
Gross profit 233 632
Operating costs (i) (138) (378)
Operating profit 95 254
Profit on disposals 1,471 3
Profit before finance costs 1,566 257
Finance costs (6) (18)
Profit before tax 1,560 239
Attributable income tax expense (ii) (370) (60)
Profit after tax for the financial year from discontinued operations 1,190 179
Profit attributable to:
Equity holders of the Company 1,190 179
Profit for the financial year from discontinued operations 1,190 179
Basic earnings per Ordinary Share from discontinued operations $1.57 $0.23
Diluted earnings per Ordinary Share from discontinued operations $1.55 $0.23
Cash flows from discontinued operations
Net cash (outflow)/inflow from operating activities (iii) (435) 234
Net cash inflow/(outflow) from investing activities (iv) 3,446 (102)
Net cash outflow from financing activities (6) (28)
(i) The depreciation and amortisation charge for discontinued
operations amounted to $26 million and $10 million respectively
(2021: $78 million and $28 million).
(ii) 2022 attributable income tax expense includes $347 million relating
to the profit on disposal of discontinued operations.
(iii) Includes the corporation tax paid on the sale of discontinued
operations.
(iv) Includes the proceeds from the disposal of discontinued operations.
9. Business and Non-Current Asset Disposals
Business disposals Disposal of other non-current assets Total
2022 2021 2022 2021 2022 2021
Continuing operations $m $m $m $m $m $m
Net assets disposed 321 188 65 80 386 268
Reclassification of currency translation effects on disposal (4) 29 - - (4) 29
Total 317 217 65 80 382 297
Proceeds from disposals (net of disposal costs) 218 295 115 118 333 413
(Loss)/profit on disposals from continuing operations (99) 78 50 38 (49) 116
Discontinued operations
Profit on disposals from discontinued operations (note 8) 1,471 - - 3 1,471 3
Net cash inflow arising on disposal
Continuing operations
Proceeds from disposals from continuing operations 218 295 115 118 333 413
Less: cash and cash equivalents disposed (4) (31) - - (4) (31)
Less: deferred proceeds arising on disposal - (1) - - - (1)
Net cash inflow arising on disposal from continuing operations 214 263 115 118 329 381
Discontinued operations
Net cash inflow arising on disposal from discontinued operations 3,498 - - 6 3,498 6
Total Group net cash inflow arising on disposal 3,712 263 115 124 3,827 387
10. Net Finance Costs
Continuing operations
2022 2021
$m $m
Finance costs 401 357
Finance income (65) -
Net other financial expense 40 42
Total net finance costs 376 399
The overall total is analysed as follows:
Net finance costs on interest-bearing loans and borrowings including leases 337 361
and cash and cash equivalents
Net credit re change in fair value of derivatives and fixed rate debt (1) (4)
Finance costs less income 336 357
Unwinding of discount element of provisions for liabilities 16 18
Unwinding of discount applicable to deferred and contingent acquisition 20 20
consideration
Unwinding of discount applicable to deferred divestment proceeds (8) (12)
Unwinding of discount applicable to leased mineral reserves 6 6
Pension-related finance cost (net) (note 15) 6 10
Total net finance costs 376 399
11. Net Debt
2022 2021
Book value Fair Book value Fair
value value
$m $m $m $m
Non-current assets
Derivative financial instruments 3 3 97 97
Current assets
Cash and cash equivalents 5,936 5,936 5,783 5,783
Derivative financial instruments 39 39 39 39
Non-current liabilities
Interest-bearing loans and borrowings (i) (8,145) (7,517) (9,938) (10,786)
Lease liabilities (1,059) (1,059) (1,374) (1,374)
Derivative financial instruments (77) (77) - -
Current liabilities
Interest-bearing loans and borrowings (i) (1,491) (1,484) (549) (554)
Lease liabilities (260) (260) (297) (297)
Derivative financial instruments (51) (51) (14) (14)
Group net debt (5,105) (4,470) (6,253) (7,106)
(i) Interest-bearing loans and borrowings are Level 2 instruments
whose fair value is derived from quoted market prices.
11. Net Debt - continued
Gross debt, net of derivatives, matures as follows:
2022 2021
$m $m
Within one year 1,763 821
Between one and two years 881 1,642
Between two and three years 1,403 866
Between three and four years 920 1,399
Between four and five years 982 971
After five years 5,092 6,337
Total 11,041 12,036
Reconciliation of opening to closing net debt:
31 December 2022 At 1 January Book value Cash flow Movement attributable to acquired companies Movement attributable to disposed companies Mark-to-market and other Translation adjustment At 31 December Book value
non-cash adjustments
$m $m $m $m $m $m $m
Cash and cash equivalents 5,783 393 22 (31) - (231) 5,936
Interest-bearing loans and borrowings (10,487) 326 (8) 6 159 368 (9,636)
Lease liabilities (1,671) 249 (107) 342 (189) 57 (1,319)
Derivative financial instruments - financing 122 11 - - (194) (9) (70)
Liabilities from financing activities (12,036) 586 (115) 348 (224) 416 (11,025)
Derivative financial instruments - non-financing - (58) - - 38 4 (16)
Group net debt (6,253) 921 (93) 317 (186) 189 (5,105)
The equivalent disclosure for the prior year is as follows:
31 December 2021
Cash and cash equivalents 7,721 (1,617) 7 (31) - (297) 5,783
Interest-bearing loans and borrowings (12,215) 1,183 (3) - 90 458 (10,487)
Lease liabilities (1,635) 264 (88) 3 (249) 34 (1,671)
Derivative financial instruments (net) 188 37 - - (52) (51) 122
Group net debt (5,941) (133) (84) (28) (211) 144 (6,253)
Market capitalisation
Market capitalisation, calculated as the year end share price multiplied by
the number of Ordinary Shares in issue, is as follows:
2022 2021
$m $m
Market capitalisation - Euronext Dublin (i) 29,462 40,593
(i) The market capitalisation figure of €27.6 billion (2021:
€35.9 billion), based on the euro denominated share price per CRH's listing
on Euronext Dublin, was translated to US Dollar using the relevant closing
rates as noted in the principal foreign exchange rates table in note 1.
11. Net Debt - continued
Liquidity information - borrowing facilities
The Group manages its borrowing ability by entering into committed borrowing
agreements. Revolving committed bank facilities are generally available to the
Group for periods of up to five years from the date of inception. The undrawn
committed facilities figures shown in the table below represent the facilities
available to be drawn by the Group at 31 December 2022.
2022 2021
$m $m
Within one year - 19
Between three and four years 3,736 -
Between four and five years 9 3,964
Total 3,745 3,983
Net debt metrics
The net debt metrics based on net debt as shown in note 11 are as follows:
2022 2021
Net debt as a percentage of market capitalisation 17% 15%
Net debt as a percentage of total equity 23% 30%
12. Future Purchase Commitments for Property, Plant and Equipment
2022 2021 (i)
$m $m
Contracted for but not provided in the financial statements 862 628
Authorised by the Directors but not contracted for 530 417
(i) Includes contracted for but not provided for and authorised by the
Directors but not contracted for commitments of $11 million and $25 million
respectively relating to discontinued operations.
13. Related Party Transactions
Sales to and purchases from joint ventures and associates are as follows:
Joint Ventures Associates
2022 2021 2022 2021
$m $m $m $m
Continuing operations
Sales 192 157 45 42
Purchases 41 29 20 19
Loans extended by the Group to joint ventures and associates are included in
financial assets. Amounts receivable from and payable to equity accounted
investments (arising from the aforementioned sales and purchases transactions)
as at the balance sheet date are included in trade and other receivables and
trade and other payables respectively in the Consolidated Balance Sheet.
14. Business Combinations
The acquisitions completed during the year ended 31 December 2022 by
reportable segment, together with the completion dates, are detailed below;
these transactions entailed the acquisition of an effective 100% stake except
where indicated to the contrary:
Americas Materials:
Alabama: North Alabama Paving, Inc. (30 June);
Arkansas: Marion County Paving (18 March);
Colorado: Granby Sand & Gravel (31 March);
Florida: certain assets of Kudzue 3 Trucking, Inc. (11 March);
Kentucky: Hinkle Contracting, LLC (13 May);
Mississippi: Krystal Gravel, Inc. (23 December);
Texas: LD Construction Company and PTSS Investments, LLC (2 December) and
Moore Brothers Construction Company (16 December);
Utah: Chapman Construction (16 December); and
West Virginia: Jefferson Asphalt Products Company (23 September).
Building Products:
Substantial Acquisition: on 8 July, CRH acquired Barrette Outdoor Living, Inc.
(Barrette), North America's leading provider of residential fencing and
railing solutions headquartered in Middleburg Heights, Ohio, US. The assets
acquired are all in the US and are expected to enhance our existing offering
of sustainable outdoor living solutions in North America.
Americas
California: Calstone Company (29 March);
Ohio: Normandy Industries, Inc. (21 October);
South Carolina: Sterling Sand, LLC (19 October);
Texas: certain assets of Rinker Materials (18 April); Soil Mender Products (25
July); and Inwesco, Inc. (12 December); and
West Virginia: Grant County Mulch, Inc. (19 December).
Other
Ireland: RS Sockets Ltd. (15 December); and
Poland: certain assets of Libet Company (2 September).
Europe Materials:
Croatia: Thermostone (1 April);
Denmark: Confac Holdings A/S (1 April) and Gunderup (1 December);
Finland: Terrawise Oy Stone Aggregates (31 May);
Poland: Mabau Group (75%, 21 March);
Romania: certain assets of SUT-ICIM and Irca SRL (23 February) and Simbeton
SRL (29 July); and
Slovakia: certain assets of U.S. Steel Košice, s.r.o. (1 January) and certain
assets of COLAS Slovakia, a.s. (10 January).
14. Business Combinations - continued
The identifiable net assets acquired, including adjustments to provisional
fair values, were as follows:
Barrette Other acquisitions Total
2022 2022 2022 2021
ASSETS $m $m $m $m
Non-current assets
Property, plant and equipment 309 597 906 609
Intangible assets (i) 809 178 987 131
Equity accounted investments - 28 28 -
Total non-current assets 1,118 803 1,921 740
Current assets
Inventories 247 128 375 157
Trade and other receivables (ii) 168 59 227 191
Cash and cash equivalents 8 14 22 7
Total current assets 423 201 624 355
LIABILITIES
Trade and other payables (148) (47) (195) (143)
Provisions for liabilities (16) (3) (19) (1)
Lease liabilities (48) (59) (107) (88)
Interest-bearing loans and borrowings - (8) (8) (3)
Deferred income tax liabilities (192) (55) (247) (37)
Total liabilities (404) (172) (576) (272)
Total identifiable net assets at fair value 1,137 832 1,969 823
Goodwill arising on acquisition (iii) 774 546 1,320 679
Total consideration 1,911 1,378 3,289 1,502
Consideration satisfied by:
Cash payments 1,911 1,364 3,275 1,501
Deferred consideration (stated at net present cost) - 10 10 -
Contingent consideration - 4 4 1
Total consideration 1,911 1,378 3,289 1,502
Net cash outflow arising on acquisition
Cash consideration 1,911 1,364 3,275 1,501
Less: cash and cash equivalents acquired (8) (14) (22) (7)
Total outflow in the Consolidated Statement of Cash Flows 1,903 1,350 3,253 1,494
Footnotes (i), (ii) and (iii) appear on page 29.
14. Business Combinations - continued
The acquisition balance sheet presented on the previous page reflects the
identifiable net assets acquired in respect of acquisitions completed during
2022, together with adjustments to provisional fair values in respect of
acquisitions completed during 2021. The measurement period for a number of
acquisitions completed in 2021, closed in 2022 with no material adjustments
identified.
CRH performs a detailed quantitative and qualitative assessment of each
acquisition in order to determine whether it is material for the purposes of
separate disclosure under IFRS 3 Business Combinations. The acquisition of
Barrette is deemed to be a material acquisition. None of the remaining
acquisitions completed during the financial year were considered sufficiently
material to warrant separate disclosure of the attributable fair values. Due
to the size and scale of the Barrette acquisition, the determination of the
fair values of identifiable assets acquired and liabilities assumed as
disclosed above are provisional (principally in respect of property, plant and
equipment, provisions for liabilities and the associated goodwill and deferred
tax aspects). The fair value assigned to identifiable assets and liabilities
acquired is based on estimates and assumptions made by management at the time
of acquisition. CRH may revise its purchase price allocation during the
subsequent reporting window as permitted under IFRS 3.
Footnotes to the acquisition balance sheet on page 28
(i) Marketing-related, customer-related and contract-based intangible
assets of $174 million, $594 million and $41 million respectively arose on the
acquisition of Barrette. These primarily related to brand names, patents and
non-contractual customer relationships. Due to the asset-intensive nature of
operations in the Americas Materials and Europe Materials business segments,
no significant separately identifiable intangible assets were recognised on
business combinations in these segments.
(ii) Trade and other receivables
Gross contractual amounts due Loss allowance Fair value
2022 2021 2022 2021 2022 2021
$m $m $m $m $m $m
Barrette 169 - 1 - 168 -
Other acquisitions 60 192 1 1 59 191
Total 229 192 2 1 227 191
(iii) The principal factor contributing to the recognition of goodwill
on acquisitions entered into by the Group is the realisation of cost savings
and other synergies with existing entities in the Group which do not qualify
for separate recognition as intangible assets. $1,289 million of the goodwill
recognised in respect of acquisitions completed in 2022 is expected to be
deductible for tax purposes (2021: $284 million).
Acquisition-related costs
2022 2021
$m $m
Barrette 27 -
Other acquisitions 12 13
Total 39 13
The above acquisition-related costs, which exclude post-acquisition
integration costs, have been included in operating costs in the Consolidated
Income Statement.
14. Business Combinations - continued
The following table analyses the 29 acquisitions completed in 2022 (2021: 20
acquisitions) by reportable segment and provides details of the goodwill and
consideration figures arising in each of those segments:
Number of acquisitions Goodwill Consideration
2022 2021 2022 2021 2022 2021
Reportable segments $m $m $m $m
Continuing operations
Americas Materials 10 8 172 239 493 694
Building Products 10 7 1,205 417 2,652 734
Europe Materials 9 4 34 1 144 17
Total Group from continuing operations 29 19 1,411 657 3,289 1,445
Discontinued operations
Building Products - Building Envelope - 1 - 17 - 56
1,411 674 3,289 1,501
Adjustment to provisional fair value of prior year acquisitions (91) 5 - 1
Total 1,320 679 3,289 1,502
Post-acquisition impact
The post-acquisition impact of acquisitions completed during the year on the
Group's profit for the financial year was as follows:
Barrette Other acquisitions Total
2022 2022 2022 2021
$m $m $m $m
Continuing operations
Revenue 347 414 761 524
(Loss)/profit before tax for the financial year (33) 25 (8) 55
The revenue and profit of the Group for the financial year determined in
accordance with IFRS as though the acquisitions effected during the year had
been at the beginning of the year would have been as follows:
2022 CRH Group Consolidated
acquisitions excluding 2022 Group including
acquisitions acquisitions
$m $m $m
Revenue 1,730 31,962 33,692
Profit before tax for the financial year 51 3,477 3,528
There have been no acquisitions completed subsequent to the balance sheet date
which would be individually material to the Group, thereby requiring
disclosure under either IFRS 3 or IAS 10 Events after the Balance Sheet Date.
Development updates, giving details of acquisitions which do not require
separate disclosure on the grounds of materiality, are published periodically.
15. Retirement Benefit Obligations
The Group operates either defined benefit or defined
contribution pension schemes in all of its principal operating areas.
Financial assumptions - scheme liabilities
The major long-term assumptions used by the Group's actuaries in the
computation of scheme liabilities and post-retirement healthcare obligations
are as follows:
Eurozone United States Switzerland
and Canada
2022 2021 2022 2021 2022 2021
% % % % % %
Rate of increase in:
- salaries 3.30 2.92 3.00 3.03 2.50 1.25
- pensions in payment 2.10 1.90 - - - -
Inflation 2.30 1.90 2.10 2.00 2.00 0.75
Discount rate 4.20 1.43 5.20 2.82 2.20 0.30
Medical cost trend rate n/a n/a 1.87 5.91 n/a n/a
The following table provides a reconciliation of scheme assets (at bid value)
and the actuarial value of scheme liabilities (using the aforementioned
assumptions):
Year ended 31 December 2022
Assets Liabilities Total Impact of asset ceiling Net Pension Asset
$m $m $m $m $m
At 1 January 3,174 (3,483) (309) - (309)
Administration expenses (5) - (5) - (5)
Current service cost - (46) (46) - (46)
Past service credit (net) - 1 1 - 1
Interest income on scheme assets 52 - 52 - 52
Interest cost on scheme liabilities - (58) (58) - (58)
Disposals - 25 25 - 25
Remeasurement adjustments:
-return on scheme assets excluding interest income (534) - (534) - (534)
-experience variations - (48) (48) - (48)
-actuarial gain from changes in financial assumptions - 951 951 - 951
-actuarial loss from changes in demographic assumptions - (2) (2) - (2)
-impact of asset ceiling - - - (88) (88)
Employer contributions paid 35 - 35 - 35
Contributions paid by plan participants 7 (7) - - -
Benefit and settlement payments (142) 142 - - -
Translation adjustment (144) 154 10 - 10
At 31 December (i) 2,443 (2,371) 72 (88) (16)
Related deferred income tax asset 22
Net pension asset 6
(i) Reconciliation to Consolidated Balance Sheet
Retirement benefit assets 261
Retirement benefit obligations (277)
Net pension deficit (16)
15. Retirement Benefit Obligations - continued
Year ended 31 December 2021
Assets Liabilities Net Pension Liability
$m $m $m
At 1 January 3,321 (3,877) (556)
Administration expenses (4) - (4)
Current service cost - (55) (55)
Past service credit (net) - 3 3
Loss on settlements - (6) (6)
Interest income on scheme assets 46 - 46
Interest cost on scheme liabilities - (56) (56)
Disposals - 1 1
Remeasurement adjustments:
-return on scheme assets excluding interest income 165 - 165
-experience variations - (7) (7)
-actuarial gain from changes in financial assumptions - 70 70
-actuarial gain from changes in demographic assumptions - 36 36
Employer contributions paid 43 - 43
Contributions paid by plan participants 7 (7) -
Benefit and settlement payments (258) 258 -
Translation adjustment (146) 157 11
At 31 December (i) 3,174 (3,483) (309)
Related deferred income tax asset 89
Net pension liability (220)
(i) Reconciliation to Consolidated Balance Sheet
Retirement benefit assets 166
Retirement benefit obligations (475)
Net pension deficit (309)
16. Statutory Accounts and Audit Opinion
The financial information presented in this report does not constitute the
statutory financial statements for the purposes of Chapter 4 of Part 6 of the
Companies Act 2014. Full statutory financial statements for the year ended 31
December 2022 prepared in accordance with IFRS, upon which the Auditor has
given an unqualified audit report, have not yet been filed with the Registrar
of Companies. Full statutory financial statements for the year ended 31
December 2021, prepared in accordance with IFRS and containing an unqualified
audit report, have been delivered to the Registrar of Companies.
17. Annual Report and Form 20-F and Annual General Meeting (AGM)
The 2022 Annual Report and Form 20-F is expected to be published on the CRH
website, www.crh.com (http://www.crh.com) , on 10 March 2023 and posted on 29
March 2023 to those shareholders who have requested a paper copy. A paper copy
of the Annual Report and Form 20-F may be obtained at the Company's registered
office from 29 March 2023.
The Company's AGM is scheduled to be held at 11:00 a.m. on 27 April 2023. The
AGM Notice is expected to be posted to shareholders on 29 March 2023.
18. Board Approval
This announcement was approved by the Board of Directors of CRH plc on 1 March
2023.
Glossary of Alternative Performance Measures
CRH uses a number of alternative performance measures (APMs) to monitor
financial performance. These measures are referred to throughout the
discussion of our reported financial position and operating performance and
are measures which are regularly reviewed by CRH management.
The APMs as summarised below should not be viewed in isolation or as an
alternative to the equivalent GAAP measure.
The APMs may not be uniformly defined by all companies and accordingly they
may not be directly comparable with similarly titled measures and disclosures
by other companies. Certain information presented is derived from amounts
calculated in accordance with IFRS but is not itself an expressly permitted
GAAP measure.
EBITDA
EBITDA is defined as earnings from continuing operations before interest,
taxes, depreciation, amortisation, asset impairment charges, profit on
disposals and the Group's share of equity accounted investments' profit after
tax. It is quoted by management, in conjunction with other GAAP and non-GAAP
financial measures, to aid investors in their analysis of the performance of
the Group and to assist investors in the comparison of the Group's performance
with that of other companies.
EBITDA is monitored by management in order to allocate resources between
segments and to assess performance. Given that net finance costs and income
tax are managed on a centralised basis, these items are not allocated between
operating segments for the purpose of the information presented to the Chief
Operating Decision Maker(6) (Group Chief Executive, Chief Financial Officer
and Chief Operating Officer). EBITDA margin is calculated by expressing EBITDA
as a percentage of sales.
Operating profit is defined as earnings before interest, taxes, profit on
disposals and the Group's share of equity accounted investments' profit after
tax.
A reconciliation of Group profit to EBITDA is presented below.
Continuing operations
2022 2021
$m $m
Group profit for the financial year 2,684 2,442
Income tax expense 785 661
Profit before tax 3,469 3,103
Share of equity accounted investments' profit - (55)
Other financial expense 40 42
Finance costs less income 336 357
Profit before finance costs 3,845 3,447
Loss/(profit) on disposals 49 (116)
Group operating profit 3,894 3,331
Depreciation charge 1,618 1,613
Amortisation of intangibles 103 46
EBITDA 5,615 4,990
6 Effective 1 January 2022, following the appointment of the Chief Operating
Officer and a resultant change in the reporting line of the "segment managers"
as outlined in IFRS 8, the Group has determined that the Group Chief
Executive, Chief Financial Officer and Chief Operating Officer (formerly the
Group Chief Executive and Chief Financial Officer) together fulfil the role of
Chief Operating Decision Maker (as defined in IFRS 8). This did not result in
any change to the Group's operating segments.
Glossary of Alternative Performance Measures - continued
RONA
Return on Net Assets is a key internal pre-tax and pre-non-cash-impairment
measure of operating performance throughout the CRH Group and can be used by
management and investors to measure the relative use of assets between CRH's
business segments and to compare to other businesses. The metric measures
management's ability to generate profits from the net assets required to
support that business, focusing on both profit maximisation and the
maintenance of an efficient asset base; it encourages effective fixed asset
maintenance programmes, good decisions regarding expenditure on property,
plant and equipment and the timely disposal of surplus assets, and also
supports the effective management of the Group's working capital base.
RONA is calculated by expressing total Group operating profit excluding
non-cash-impairment charges as a percentage of average net assets. Net assets
comprise total assets by segment (including assets held for sale) less total
liabilities by segment (excluding lease liabilities and including liabilities
associated with assets classified as held for sale) as shown in note 5 on page
19, and excludes equity accounted investments and other financial assets, net
debt, and tax assets and liabilities. The average net assets for the year is
the simple average of the opening and closing balance sheet figures.
The calculation of RONA is presented below:
2022 2021
$m $m
Group operating profit - continuing operations 3,894 3,331
Group operating profit - discontinued operations 95 254
Group operating profit (numerator for RONA computation) 3,989 3,585
Current year
Segment assets (i) 38,396 37,935
Segment liabilities (i) (9,517) (9,971)
Group segment net assets 28,879 27,964
Lease liabilities (ii) 1,319 1,671
Group segment net assets excluding lease liabilities 30,198 29,635
Prior year
Segment assets (i) 37,935 36,218
Segment liabilities (i) (9,971) (9,136)
Group segment net assets 27,964 27,082
Lease liabilities (ii) 1,671 1,635
Group segment net assets excluding lease liabilities 29,635 28,717
Average net assets (denominator for RONA computation) 29,917 29,176
RONA 13.3% 12.3%
(i) Segment assets and liabilities as disclosed in note 5 on page
19.
(ii) Segment liabilities include lease liabilities which are debt in
nature and are therefore adjusted for in arriving at the calculation of Group
segment net assets for the calculation of RONA. Segment lease liabilities at
31 December 2022 amounted to: Americas Materials $393 million (2021: $381
million), Building Products $468 million (2021: $773 million) and Europe
Materials $458 million (2021: $517 million).
Glossary of Alternative Performance Measures - continued
Net Debt and Net Debt/EBITDA
Net debt is used by management as it gives additional insight into the Group's
current debt situation less available cash. Net debt is provided to enable
investors to see the economic effect of gross debt, related hedges and cash
and cash equivalents in total. Net debt is a non-GAAP measure and comprises
current and non-current interest-bearing loans and borrowings, lease
liabilities, cash and cash equivalents and current and non-current derivative
financial instruments (net).
Net Debt/EBITDA is monitored by management and is useful to investors in
assessing the Company's level of indebtedness relative to its profitability.
It is the ratio of Net Debt to EBITDA and is calculated below:
2022 2021
$m $m
Net debt
Cash and cash equivalents (i) 5,936 5,783
Interest-bearing loans and borrowings (i) (9,636) (10,487)
Lease liabilities (i) (1,319) (1,671)
Derivative financial instruments (net) (i) (86) 122
Group net debt (5,105) (6,253)
EBITDA - from continuing operations 5,615 4,990
Times Times
Net debt divided by EBITDA - from continuing operations 0.9 1.3
(i) These items appear in note 11 on page 24.
Glossary of Alternative Performance Measures - continued
Organic Revenue, Organic Operating Profit and Organic EBITDA
The terms 'like-for-like' (LFL) and 'organic' are used interchangeably
throughout this report.
Because of the impact of acquisitions, divestments, exchange translation and
other non-recurring items on reported results each year, the Group uses
organic revenue, organic operating profit and organic EBITDA as additional
performance indicators to assess performance of pre-existing operations each
year.
Organic revenue, organic operating profit and organic EBITDA are arrived at by
excluding the incremental revenue, operating profit and EBITDA contributions
from current and prior year acquisitions and divestments, the impact of
exchange translation and the impact of any non-recurring items. Organic EBITDA
margin is calculated by expressing organic EBITDA as a percentage of organic
revenue.
In the Business Performance review on pages 1 to 7, changes in organic
revenue, organic operating profit and organic EBITDA are presented as
additional measures of revenue, operating profit and EBITDA to provide a
greater understanding of the performance of the Group. A reconciliation of the
changes in organic revenue, organic operating profit and organic EBITDA to the
changes in total revenue, operating profit and EBITDA for the Group and by
segment is presented with the discussion of each segment's performance in
tables contained in the segment discussion commencing on page 3.
Principal Risks and Uncertainties
Under Section 327(1)(b) of the Companies Act 2014 and Regulation 5(4)(c)(ii)
of the Transparency (Directive 2004/109/EC) Regulations 2007, the Group is
required to give a description of the principal risks and uncertainties which
it faces. These risks and uncertainties reflect the international scope of the
Group's operations and the Group's decentralised structure. During the course
of 2023, new risks and uncertainties may materialise attributable to changes
in markets, regulatory environments and other factors and existing risks and
uncertainties may become less relevant.
Principal Strategic Risks and Uncertainties
Industry cyclicality and economic conditions: Construction activity, and
therefore demand for the Group's products, is inherently cyclical and
influenced by multiple factors, including global and national economic
circumstances (particularly those affecting the infrastructure and
construction markets), monetary policy, consumer sentiment, swings in fuel and
other input costs, and weather conditions that may disrupt outdoor
construction activity.
People management: The Group may not achieve its strategic objectives if it is
not successful in attracting, engaging, retaining and developing employees,
planning for leadership succession, developing a diverse and inclusive
workforce, and building constructive relationships with collective
representation groups.
Commodity products and substitution: Many of the Group's products are
commodities that face strong volume and price competition. Such products may
also face competition from substitute products, including new products, that
the Group does not produce. The Group must maintain strong customer
relationships to ensure it can respond to changing consumer preferences and
approaches to construction. Failure to differentiate and innovate could lead
to market share decline, thus adversely impacting financial performance.
Portfolio management: The Group engages in acquisition and divestment activity
as part of active portfolio management which presents risks around due
diligence, execution and integration of assets. Additionally, the Group may be
liable for liabilities of companies it has acquired or divested. Failure to
efficiently identify and execute deals may limit the Group's growth potential
and impact financial performance.
Public policies and geopolitics: Adverse public policy, economic, social and
political situations in any country in which the Group operates could lead to
health and safety risks for the Group's people, a fall in demand for the
Group's products, business interruption, restrictions on repatriation of
earnings or a loss of plant access.
Strategic mineral reserves: Appropriate reserves are increasingly scarce, and
licences and permits required for operations are becoming harder to secure.
Numerous uncertainties are inherent in estimating reserves and projecting
production rates of the minerals used in the Group's products. Failure of the
Group to plan for reserve depletion and secure or maintain permits may result
in operation stoppages, adversely impacting financial performance.
Principal Operational Risks and Uncertainties
Climate change and policy: The impact of climate change may adversely affect
the Group's operations and cost base and the stability of markets in which the
Group operates. Risks related to climate change that could affect the Group's
operations and financial performance include both physical risks (such as
acute and chronic changes in weather) and transitional risks (such as
technological development, policy and regulation change and market and
economic responses).
Information technology and cyber security: The Group is dependent on
information and operational technology systems (including those for which
third-parties are in whole or in part responsible) to support its business
activities. Security incidents and cyber-attacks are becoming increasingly
sophisticated, and our systems for protecting our assets and data against
cyber security risks may be insufficient. Security breaches, IT interruptions
or data loss could result in significant business disruption, loss of
production, reputational damage and/or regulatory penalties.
Health and safety performance: The Group's businesses operate in an industry
with inherent health and safety risks, including operation of heavy vehicles,
working at height, and use of mechanised processes. Failure to ensure safe
workplaces could result in a deterioration in the Group's safety performance
and related adverse regulatory action or legal liability. Health and safety
incidents could significantly impact the Group's operational and financial
performance, as well as its reputation.
Sustainability and corporate social responsibility: The nature of the Group's
activities poses certain environmental and social risks, which are also
subject to an evolving regulatory framework and changing societal
expectations. Failure to embed sustainability principles within the Group's
businesses and strategy may result in non-compliance with relevant
regulations, standards and best practices and lead to adverse stakeholder
sentiment and reduced financial performance.
Supply chain continuity: The Group must reliably and economically source
various raw materials, equipment and other inputs from various third-party
suppliers and then transport finished products to satisfy customer demands and
meet contractual requirements. Our ability to balance maintaining resilient
supply chains with optimising our working capital and inventory levels is
critical to the continuity and strong financial returns of our operations.
Failure to manage any material disruption in our supply chains could adversely
impact our ability to service our customers and result in a deterioration in
operational and/or financial performance.
Principal Risks and Uncertainties - continued
Principal Compliance Risks and Uncertainties
Laws, regulations and business conduct: The Group is subject to a wide variety
of local and international laws and regulations. There can be no assurance
that the Group's policies and procedures afford adequate protection against
compliance failures or other fraudulent and/or corrupt activities. Potential
breaches of local and international laws and regulations could result in
litigation or investigations, the imposition of significant fines, sanctions,
adverse operational impact (to include an inability to operate in key
markets/debarment) and reputational damage.
Principal Financial and Reporting Risks and Uncertainties
Taxation charge and balance sheet provisioning: The Group is exposed to
uncertainties stemming from governmental actions in respect of taxes paid or
payable in the future in all jurisdictions of operation. In addition, various
assumptions are made in the computation of the overall tax charge and in
balance sheet provisions which may need to be adjusted over time. Changes in
tax regimes or assessment of additional tax liabilities in future tax audits
could result in incremental tax liabilities which could have a material
adverse effect on cash flows and the financial results of operations.
Financial instruments: The Group uses financial instruments throughout its
businesses giving rise to interest rate and leverage, foreign currency,
counterparty, credit rating and liquidity risks. A downgrade of the Group's
credit ratings may give rise to increases in future funding costs and may
impair the Group's ability to raise funds on acceptable terms. In addition,
insolvency of the financial institutions with which the Group conducts
business may adversely impact the Group's financial position.
Goodwill impairment: Significant under performance in any of the Group's major
cash-generating units or the divestment of businesses in the future may give
rise to a material write-down of goodwill. While a non-cash item, a material
write-down of goodwill could have a substantial impact on the Group's income
and equity.
Foreign currency translation: The principal foreign exchange risks to which
the Consolidated Financial Statements are exposed pertain to (i) adverse
movements in reported results when translated into the reporting currency; and
(ii) declines in the reporting currency value of net investments which are
denominated in a wide basket of currencies other than the reporting currency.
Adverse changes in the exchange rates could negatively affect retained
earnings.
Disclaimer / Forward-Looking Statements
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 contains statements that are, or may be deemed to be,
forward-looking statements with respect to the financial condition, results of
operations, business, viability and future performance of CRH and certain of
the plans and objectives of CRH, including but not limited to the statements
under: "Key Highlights", regarding the pipeline of opportunities and future
value creation; the Chief Executive's quote, regarding future growth
opportunities and value creation; "Listing Considerations" regarding the
proposed transition to a US primary listing, the benefits of such transition
and our expectations regarding growth in the US market; "Sustainability",
regarding the Group's decarbonisation targets, expansion of sustainable
product offerings and establishment of CRH Ventures; "Trading Outlook",
regarding expectations for demand, sales volumes, pricing, market trends,
government funding, onshoring and macroeconomic conditions, including interest
rates and inflation; "Dividend", regarding the timing and amount of dividend
payments, as well as plans and expectations regarding the Group's progressive
dividend policy; "Share Buyback Programme", regarding the timing and amount of
share buybacks; our intent to increase our share buyback programme, our
outlook for cash generation, our progressive dividend policy and our credit
rating; "Balance Sheet and Liquidity", with respect to our belief that the
Group has sufficient cash balances to meet all maturing debt obligations for
the next 5 years; "Annual Report and Form 20-F and Annual General Meeting
(AGM)", regarding timing of the AGM and the publication of the Group's 2022
Annual Report and Form 20-F; and "Principal Risks and Uncertainties",
regarding the nature and magnitude of risks and uncertainties facing the
Group.
These forward-looking statements may generally, but not always, be identified
by the use of words such as "will", "anticipates", "should", "could", "would",
"targets", "aims", "may", "continues", "expects", "is expected to", "is likely
to," "estimates", "believes", "intends," "plans," "objective," or similar
expressions. These forward-looking statements include all matters that are not
historical facts or matters of fact at the date of this document.
By their nature, forward-looking statements involve risk and uncertainty
because they relate to events and depend on circumstances that may or may not
occur in the future and reflect the Company's current expectations and
assumptions as to such future events and circumstances that may not prove
accurate.
A number of material factors could cause actual results and developments to
differ materially from those expressed or implied by these forward-looking
statements, certain of which are beyond our control, and which include, among
other factors: economic and financial conditions, including increased interest
rates, inflation, price volatility and/or labour and materials shortages in
countries and regions where we operate; the pace of growth in the overall
construction and building materials sector; demand for infrastructure,
residential and non-residential construction in our geographic markets;
increased competition and its impact on prices; increases in energy and/or raw
materials costs; adverse changes to laws and regulations, including in
relation to climate change and sustainability; the impact of unfavourable
weather, including due to climate change; our ability to successfully develop
and integrate sustainable solutions into our business and investor and/or
consumer sentiment regarding the importance of sustainable practices and
products; approval or allocation of funding for infrastructure programmes;
adverse political developments in various countries and regions, including war
and acts of terrorism; failure to completely or successfully integrate
acquisitions; indirect and direct effects of the COVID-19 pandemic;
cyber-attacks, sabotage or other incidents and their direct or indirect
effects on our business; and the specific factors identified in the section
entitled "Principal Risks and Uncertainties" herein and in the section
entitled "Risk Factors" in our 2021 Annual Report on Form 20-F as filed with
the US Securities and Exchange Commission. You are cautioned not to place
undue reliance on any forward-looking statements. These forward-looking
statements are made as of the date of this document. The Company expressly
disclaims any obligation or undertaking to publicly update or revise these
forward-looking statements other than as required by applicable law. The
forward-looking statements in this document do not constitute reports or
statements published in compliance with any of Regulations 6 to 8 of the
Transparency (Directive 2004/109/EC) Regulations 2007 (as amended).
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 (including as it forms part of UK
domestic law). For the purposes of Article 2 of Commission Implementing
Regulation (EU) 2016/1055, the person responsible for arranging for the
release of this announcement on behalf of CRH plc is Jim Mintern, Chief
Financial Officer. The date and time of this statement is the same as the
date and time that it has been communicated to the media.
Appendix 1 2023 Organisational Structure
Americas Europe
Pro forma FY22 $ million Sales EBITDA Sales EBITDA
Materials Solutions 14,324 2,748 9,349 1,246
Essential Materials 4,160 4,625
Road Solutions 10,164 4,724
Building Solutions 6,188 1,255 2,862 366
Building & Infrastructure Solutions 2,379 2,252
Outdoor Living Solutions 3,809 610
Sub-total 20,512 4,003 12,211 1,612
Group 32,723 5,615
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