CRH Calls 2020 Results ‘Robust Performance In a Challenging Environment’

CRH reported yearly sales of $27.6 billion in 2020 versus $28.1 billion in 2019. The company called its 2020 results a “robust performance in a challenging environment.” Economic activity in North America was impacted by the global pandemic, partly offset by government stimulus efforts. Like-for-like sales in its Americas Materials segment declined by 3% compared to 2019, mainly impacted by COVID-19 restrictions, project delays in some key states and unfavorable weather during the first half of the year. 

“Our 2020 performance is testament to the commitment of our people and the strength and resilience of our business model,” said Albert Manifold, chief executive. “Through the repositioning of our business in recent years and our relentless focus on continuous business improvement, we have delivered record levels of profitability, margins and cash generation. Although the near-term outlook remains uncertain, our unique portfolio of businesses together with the strength of our balance sheet leaves us well positioned to capitalize on the growth opportunities that lie ahead.”

Americas Materials generated EBITDA of $2.4 billion, 10% ahead of prior year and operating profit of $1.6 billion, 15% ahead of prior year despite lower sales which were 3% behind. COVID-19 restrictions negatively impacted sales volumes in the second quarter, particularly in the North division, with sales in the South division impacted by project delays in key states. 

Solid price progression, operational efficiencies, focused cost containment and lower energy costs drove margin expansion across all regions and product lines. Strong demand in the central and western parts of the United States resulted in like-for-like sales growth across all lines of business in the West region.

Overall economic and construction activity across its markets was impacted by the global pandemic; however, government stimulus to help support the U.S. economy was implemented, while infrastructure investment was underpinned by a one-year extension of the FAST Act. During 2020 Americas Materials completed seven acquisitions in the United States and Canada including aggregates, asphalt, ready mixed concrete, paving and construction operations at a total cost of $163 million. These acquisitions in addition to several mineral reserve purchases in the U.S. will continue to support future growth in key markets.

On a like-for-like basis, aggregates volumes were 2% lower but margins improved as prices were 4% higher compared to 2019. Volumes in the North division were predominantly impacted by COVID-19 restrictions in the second quarter of the year while the South division experienced lower demand primarily due to unfavorable weather in the first half of the year. Solid underlying business activity in the West division generated sales growth during the year. Prices were favorable across all divisions with the strongest contributions from the North and South divisions.

Asphalt volumes were 6% lower on a like-for-like basis due to the impact of COVID-19 restrictions on the North division and slower project bidding in key states in the South. Volumes in the West division were ahead of prior year with a strong order book of business supported by more favorable weather compared to 2019. Asphalt margins improved, benefiting from good commercial management, lower input costs, operational efficiencies and strong cost control.

Ready mixed concrete volumes were 4% behind prior year on both a total and like-for-like basis as higher volumes in the South division during the second half of the year did not fully offset lower volumes in the North and West. Strong commercial discipline delivered total and like-for-like prices up 6%, more than offsetting lower sales volumes, resulting in improved margins.

Paving and construction revenues were 6% behind prior year on a total and like-for-like basis. COVID-19 impacted the North division through government mandated restrictions, while the South experienced delayed bidding on projects in key markets due to uncertainty in state and local funding sources. The West division experienced significant growth in revenues driven by strong demand in the Central West and Mountain West regions. Overall construction margins finished ahead of 2019.

Like-for-like sales for the North division were 6% lower than 2019 as COVID-19 restrictions impacted volumes across the business. Favorable prices and lower input costs offset lower volumes and delivered operating profit improvements for the North division across the product range.

The South division’s total sales were 7% behind prior year driven by lower asphalt and construction volumes in key states as projects were delayed. Like-for-like ready mixed concrete volumes were higher than the prior year as growth in core Florida and Texas markets continued. Commercial and operational excellence across all product lines supported strong operating profit performance.

The West division increased total sales by 3% by executing on strong backlogs with support from favorable weather in comparison to the first half of 2019. Good incremental volumes coupled with strong price discipline and cost control resulted in operating profit improvements.

The company’s cement business delivered operating profit growth in 2020, driven primarily by strong price realization, performance improvement initiatives and cost saving measures. Sales volumes in U.S. operations were 2% ahead of prior year on a total and like-for-like basis as strong demand in the west more than offset COVID-19 related impacts in other regions. 

Volumes in Canada were behind 2019 due to the impact of COVID-19 restrictions, particularly during the first half of the year. In 2020, CRH adopted the Ash Grove brand for all its North American cement businesses, unifying 12 cement plants and 42 cement terminals under one recognized brand. 

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