CRH (LON:CRH) has updated investors on its full-year performance this morning.
Highlights from the company statement:
The overall trading backdrop in 2016 was positive with momentum in both the Americas and Europe, albeit at different paces, supported by a good performance from our newly established Asia Division. This was augmented by favourable weather patterns across most of our key markets in the Americas at the start of the year. With a relentless focus on performance in all our businesses, coupled with our vertically integrated business model for heavyside materials, our good operational leverage underpinned an improvement in both margins and returns.
Sales of €27.1 billion for the period were 15% ahead of 2015 reflecting the inclusion of full year results from the LH Assets and C.R. Laurence ("CRL") acquisitions which were completed in the third quarter of 2015. On a proforma basis (at constant currency, including full year 2015 trading of the LH Assets and CRL acquisitions and excluding all divested entities and certain one-off items - see pages 28 and 29) sales increased 4% due to the positive backdrop in the Group's major markets. A proforma increase of 5% in the Americas, reflecting favourable early weather with more normalised demand patterns experienced in the second half, was due to the continued positive construction markets supported by low interest rates and increasing employment. Proforma sales in Europe were 4% ahead of 2015 on the back of continued recovery in some key markets. The Asia Division reflects results from the Philippines operations acquired in the second half of 2015 as part of the LH Assets, together with CRH Asia's divisional costs. In the Philippines, proforma sales increased 1% as construction demand continued to be supported by good economic growth, strong domestic consumption and low inflation. For 2016 as a whole, higher sales and good cost control supported improved profits and margins across the Group with proforma EBITDA in the Americas 15% ahead of 2015, Europe up 3% and Asia in line.
Depreciation and amortisation charges in 2016 amounted to €1.08 billion (2015: €898 million). In addition, an impairment charge of €23 million was recognised in 2016 in respect of the carrying value of intangible assets.
Divestments and asset disposals during the year generated total profit on disposals of €55 million (2015: €101 million) as the ongoing recycling of capital continues to be embedded in the business.
The Group's €42 million share of profits from equity accounted entities was slightly lower than 2015 reflecting the full year impact of 2015 divestments partly offset by improved results in certain markets.
After net finance costs of €383 million (2015: €389 million), the Group reported profit before tax of €1.74 billion in 2016 (2015: €1,033 million). Earnings per share for the period were 69% higher than last year at 150.2c (2015: 89.1c).
Note 2 on page 17 analyses the key components of 2016 performance.
CRH's capital allocation policy reflects the Group's strategy of generating industry leading returns through value-accretive investments while delivering long-term dividend growth for shareholders. For the period 1984 to 2009 the Group maintained a progressive dividend policy delivering dividend growth in each of these years. The Group maintained the dividend at 62.5c per share for each of the subsequent six years.
An interim 2016 dividend of 18.8c (2015: 18.5c) per share was paid in November 2016. The Board is recommending a final dividend of 46.2c per share (2015: 44.0c). This would give a total dividend of 65.0c for the year, an increase of 4% over last year (2015: 62.5c). The earnings per share for the year were 150.2c representing a cover of 2.3 times the proposed dividend for the year.
It is proposed to pay the final dividend on 5 May 2017 to shareholders registered at the close of business on 10 March 2017. A scrip dividend alternative will be offered to shareholders.
While the Board continues to believe that a progressive dividend policy is appropriate for the Group, our target is to build dividend cover to 3 times over the medium-term, and accordingly any dividend increases in coming years will lag increases in earnings per share.