CRH says Ukraine’s restart is ‘the right thing to do’ as corporate profits soar

Building materials giant CRH says its business in Ukraine is back to around half capacity after being temporarily shut down in the wake of the Russian invasion earlier this year.

The Irish group’s 800 employees in the country are “all safe and well” and local plants have resumed production, CRH CEO Albert Manifold said.

Before the war, the unit made a profit of 60 million euros. That’s probably dropped to zero, he said.

The company produces cement for small consumers mainly on the domestic market. Its factories are located in south-west Ukraine, away from the front lines in the east of the country.

Mr Manifold spoke to reporters after the group reported record results for the first half of the year, with sales and margins rising, despite inflationary headwinds.

Referring to Ukraine, a relatively small part of the overall group, Mr. Manifold said that operating a cement business with high fixed costs that is well below its capacity is likely to cost the group money.

“But it’s the right thing to do as a corporate citizen,” he said.

In contrast, CRH has completely withdrawn from Russia, where it operated a shop near St. Petersburg.

“We will not return,” he said.

Mr Manifold said the war is not causing economic dislocation in the wider Central and Eastern European region, a key market for CRH thanks to economic growth and a flood of EU structural funds.

This has strengthened our awareness of who we are as Europeans

“(CRH) had not seen any regression” in investment in the rest of the region, he said. In the medium to longer term, the invasion of Ukraine will draw the region closer to the European core, he said.

“It has strengthened our awareness of who we are as Europeans,” he said.

Globally, CRH posted robust growth in the first half despite rising costs.

Earnings before interest, taxes, depreciation and amortization (Ebitda) were $2.2 billion, up 21 percent from the same period last year. Consolidated revenue was $15 billion, up 14 percent from H1 2021.

The company expects full-year Ebitda to reach $5.5 billion in a “challenging cost environment,” up from $5 billion in 2021.

Management said margins have been protected by its focus on a customer solution strategy based on selling packages that integrate services and goods that are less price-sensitive than traditional commodity supplies.

The company said stable demand for infrastructure projects and repair, maintenance and improvement work would boost its US operations, which are by far the largest contributor to group profits.

European materials sales were up 14 percent from the prior-year period, with the group attributing the increase to “strong pricing momentum across products” to counteract the inflationary cost environment.

Irish businesses had a strong start to the year and were flattered compared to Covid-hit activity in 2021.

CRH shares were the biggest gainers on the FTSE-100, up 3.4 percent. Its 3.76 percent gain on Euronext Dublin pushed the Iseq index into positive territory. CRH says Ukraine’s restart is ‘the right thing to do’ as corporate profits soar

Fry Electronics Team

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