CRH PLC (CRH) 2022 Q4 法說會逐字稿

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  • Albert Jude Manifold - Group Chief Executive & Executive Director

  • Good morning, ladies and gentlemen, and welcome to the results presentation for 2022 for CRH. My name is Albert Manifold, I'm the Chief Executive Officer. And I'm going to be joined on stage this morning by Jim Mintern, our Chief Financial Officer; and indeed Randy Lake, our Chief Operating Officer.

  • And together, Jim, Randy and I are going to present to you the next 20 minutes or so, a short presentation about our results for 2022 and what's going on within our businesses. After that, we're going to do some Q&A, and we'll be joined on stage by our Head of Investor Relations Tom Holmes, who's going to take you through the questions and feed your questions to us. And over another 25 minutes, we hope to answer some of the many questions that you have.

  • Just if I can look at the running order for today in terms of the presentation. Initially, first up, I'm going to take you through the basic market conditions that drove our performance as a group and how our group performed as overall during 2022. And then I'm going to ask Randy to join me on stage, and Randy is going to take you through the detail of our trading performance in our 2 main regions in terms of the United States and Europe.

  • Then Jim is going to come on and talk you through the financial performance, what resulted from all that trading activity and indeed our capital allocation strategy during 2022 and our thoughts on capital allocation in '23 and beyond. Randy is going to come back and talk then about our -- update you on our revised sustainability ambitions for 2030, very important that's a core part of value-added solutions.

  • And at the back end of the presentation, I'm going to talk to you about that whole content, how we're accelerating solutions, which is at the core of our strategy for CRH and indeed to talk to you about some of the other announcements this morning we made regard to our listings and indeed our outlook.

  • So let's just look at some of the big themes, big picture delivery during 2022 for CRH. It was a record year for CRH, very strong growth in sales, profitability, margins and cash. For me, as an operating individual, the standout performance was the margin performance. When you look across our peers, look across industry, we managed to advance our margins in the face of really horrific cost increases during the year and that attests to the fact that our business model in and around integrated solutions is -- continues to deliver improved business quality and improved margins.

  • Because of the performance of our business, we exited this year with the strongest balance sheet we ever had in CRH. Jim is going to talk to you further about that and how we intend to deploy that in the years ahead. But specifically with regard to now, we announced this morning a 5% increase in dividend. And indeed, Jim will take you through our thoughts around the increase in our share buyback up to $3 billion over the next 12 months.

  • Of course, around that financial performance are some of important things that happened during the course of the last year. We continue to invest in our businesses. We invested about $3.3 billion in M&A across 29 transactions around the world. On top of that, we invested a further $500 million on development CapEx, spending almost $4 billion investing in the future of our business that will reap reward for the decades to come. We've announced a new organizational structure this morning. No real change within our businesses, but more or less aligning and refining as we do in CRH, aligning and ensuring that we support our solution strategy, which is a winning strategy for CRH.

  • Randy is going to talk you through in detail how we have raised our ambitions with regard to sustainability and circularity and in particular, with regard to reduce CO2 emissions in line with the 1.5-degree scenario that was announced this year and they are now SBTi certified. And finally, I'm going to talk to you about, as I said, how we're recommending this transition to the U.S. prime listing and our logic and our thoughts behind that.

  • So just very briefly, just looking at the numbers for the group before I ask Randy, who is going to join me on stage in a moment to take through the detail of the trading performance, I mean it's a great pleasure on behalf of the 80,000 people, who work for us here, to present these numbers. Record sales, record EBITDA, record margin. And again, the margin for me being the standard in addition to the cash performance.

  • CRH is a cash machine. We generate $4.4 billion of cash in 2022. Again, that gives tremendous optionality as we go forward in terms of how we deploy that capital, and we'll talk about that later on. But for the moment, let me pass you to Randy, who's joined me here now to take you through the detail of the trading performance of our divisions in 2022. Randy?

  • Randy Lake - COO

  • Thank you, Albert, and good morning, everyone. Infrastructure represents our largest exposure across the group. And in the United States, the funding backdrop is robust, with demand underpinned by the significant increase in federal funding following the passage of the $1.2 trillion Infrastructure Investment and Jobs Act, which actually provide about 50% increase in federal highway funding alone over the next 5 years. And state budgets, they're strong as well. And here, we continue to see good momentum in funding initiatives and to maintain and improve the underlying infrastructure network across the country.

  • In the Residential segment, the pace of new build construction eased over the course of the year as a result of rising interest rates and affordability constraints. We've seen some softening of demand in single-family homes, in particular, while activity levels in other segments of the market, such as multifamily, have been strong. The residential remodeling demand has remained resilient, supported by strong household balance sheets and an aging housing stock in need of repair, maintenance and improvement. And looking ahead, we expect the slowdown in U.S. residential demand to be relatively short and shallow. The long-term fundamentals of the market are very attractive. It's supported by population growth, low inventory levels and a significant level of underbuild over the last decade.

  • In nonresidential, we experienced good levels of activity in our key segments, which include manufacturing, utilities and energy. And here, we're benefiting from higher levels of onshoring as companies simplify their global supply chains as well as significant federal investment in clean energy, utilities and semiconductors following the passing of the Inflation Reduction Act and CHIPS and Science Act. And on top of that, significant uplifts in funding provided in the IIJA for water, power and technology infrastructure. So overall, a really positive demand backdrop. And against an inflationary cost environment, pricing remains supportive with good momentum across all of our markets.

  • Turning to the performance of our Americas Materials business on Slide 6. Against that backdrop, I'm really pleased with our team's execution in 2022. Despite significant input cost headwinds, particularly in bitumen, diesel and natural gas as well as some weather disruptions in parts of the United States, we delivered further profit growth with total EBITDA 6% ahead of prior year. And that performance really reflects the successful delivery of our end-to-end solutions offering.

  • By combining the breadth of our materials, products and services, along with our design, innovation and engineering expertise, we're able to provide a complete solution for our customers right across the construction project life cycle, all the way from design and manufacturing products right through to their installation, maintenance and ultimately, the recycling of those materials. And this removes an enormous amount of complexity for our customers, and that really helps us to create a long-term partnership, which drives repeat business. And crucially, it allows us to price based on a value-added full service offering rather than simply providing base materials alone.

  • We also demonstrated strong commercial discipline and agility to adapt to the inflationary pressures we face throughout the entire year. Our commercial team secured double-digit price increases across all product categories in 2022. And together with strong cost control, we're focused on continuing to recover higher input costs to protect and improve our profitability. And as we look ahead, I'm also encouraged by the positive momentum in our backlogs, both in volume, but certainly more importantly, in margin.

  • Next to Building Products on Slide 7. And here, again, we can see the benefits of our integrated solutions strategy coming through in our financial performance. Like-for-like sales growth of 11% translated into an 18% increase in EBITDA and significant margin expansion. You can also see the strong contribution from recent acquisitions coming through with total sales and EBITDA 26% and 52% ahead of prior year.

  • The strong performance of building products reflects really the steps we've taken to strategically reshape and reposition into higher growth opportunities in recent years, focusing on developing market-leading positions in outdoor living and critical utility infrastructure. And the breadth of our products and services in these areas continues to expand and deepen our customer offering, providing us with a very unique capability to deliver a seamless integrated solution tailored to the specific needs of those individual projects.

  • Our largest acquisition in 2022 was Barrette Outdoor Living, and I'm pleased to report that the integration of the business goes well. And trading to date is very much in line with our expectation. And the teams have done a tremendous job delivering on our synergy expectations. So overall, another strong trading performance for Building Products, and we continue to build on that progress in the years ahead.

  • Now moving across to Europe on Slide 8, which represents about 25% of the group's EBITDA. And here, infrastructure demand continues to be underpinned by government and EU funding programs, particularly in the U.K., France and Poland, big important markets for us in this part of the world.

  • And very similar to North America, we've also experienced some softening in the pace of new residential construction in the recent months, but remodeling demand has remained resilient. In nonresidential construction, we experienced good demand in subsectors such as warehousing, data centers and logistics.

  • So overall, a relatively resilient demand backdrop and against a very challenging and inflationary cost environment, I'm encouraged to see the positive pricing momentum that we've experienced in recent years continuing on ahead.

  • Turning to the trading performance of our Europe Materials business on Slide 9. Despite contending with significant energy cost pressures, our business delivered a good underlying performance with like-for-like sales and EBITDA 11% and 8% ahead of prior year. And notwithstanding the ongoing conflict in Ukraine, activity levels in the rest of our Central and Eastern European businesses remained resilient with good delivery from our businesses in Poland and Romania, in particular.

  • We experienced a significant currency translation headwind in 2022 due to a stronger U.S. dollar, which resulted in about $160 million impact on our reported EBITDA. 2022 also marked the fifth consecutive year of positive pricing in Europe with pricing ahead across all products in all markets. And this positive momentum bodes well for us as we enter 2023 and continue to focus on our cost recovery and margin management. So overall, good delivery from our businesses in 2022.

  • And at this point, I'll hand you over to Jim to take you through our financial performance for the year in more detail. Jim?

  • Jim Mintern - Group Finance Director & Director

  • Thanks, Randy. And turning now to Slide 11, and the key components of our profit delivery in 2022. As you can see, we delivered a strong performance with total EBITDA just over $5.6 billion. The highlight of this slide for me is really the $408 million of organic EBITDA growth, an 8% increase compared to prior year, reflecting resilient demand in North America and Europe. Good commercial progress to address the inflationary input cost environment and the continued benefits of our integrated solutions strategy.

  • Acquisitions, net of divestments delivered a further $385 million of EBITDA in 2022, reflecting strong contributions from recent acquisitions as we continue to build out our solutions-focused offering in road infrastructure, critical utility and outdoor living. Finally, to currency translation, where we incurred an adverse currency impact of $168 million at the group level, a significant headwind in 2022 due to a stronger U.S. dollar relative to our other currency exposures.

  • Turning now to Slide 12. And here, you can see how our relentless focus on cash generation and financial discipline further strengthened our balance sheet in 2022. Looking at the key components of this performance, we ended 2021 with a net debt of $6.3 billion. And here, you can see the $4.4 billion of operating cash our businesses generated in 2022. That represents approximately an 80% conversion from EBITDA, and this has enabled us to continue to invest in our business for further growth, while also returning significant amounts of cash to our shareholders through dividends and share buybacks.

  • We completed a significant amount of portfolio activity during the year, investing $3.3 billion on 29 solution-focused acquisitions, the largest of these was the acquisition of Barrette Outdoor Living for $1.9 billion. In addition, we had a further 28 bolt-on acquisitions, which were completed at an average pre-synergy multiple of 8x EBITDA. We also received significant proceeds from divestments, which net of tax paid on the profit on disposals and a number of other items resulted in a total inflow of approximately $3.7 billion.

  • We invested approximately $1.5 billion in capital expenditure to support further growth in our existing businesses, and we returned $2.1 billion to our shareholders in the form of dividends and share buybacks, demonstrating our commitment to returning cash to our shareholders. Overall, this resulted in a net debt of $5.1 billion at year-end, representing a net debt-to-EBITDA ratio of 0.9x. This is the strongest balance sheet we've ever had in CRH, providing us with significant optionality for further value creation going forward.

  • But at this point, I'd like to take a step back and discuss our progressive disciplined approach to capital allocation. You've heard us say many times before, every capital deployment decision we make is analyzed and assessed to the lens of maximizing value for our shareholders. As you can see here on Slide 13, over the last 5 years, we've allocated over $20 billion of capital. We've invested significantly in our businesses over that time, allocating over 60% or just over $12 billion to value-accretive M&A and expansionary CapEx projects, investments that will drive further growth and value creation for years to come.

  • We've also returned significant amounts of cash to our shareholders, approximately $8 billion in the form of progressive dividends and share buybacks. But what are our expectations for the next 5 years? Well, when we look at the strength of our business today, our growth profile, the level of cash we're generating and the strength of our balance sheet, we believe that we will generate financial capacity in the order of $30 billion.

  • And to put that in context, that's broadly equivalent to the current market cap today. This all provides us with very significant optionality for long-term value creation. And I can assure you that we remain disciplined and value focused in the allocation of that capital. We will lead our investors for future growth, or we will return it to our shareholders.

  • Turning now to Slide 14. And as we've discussed, returning cash to shareholders is an embedded part of our capital allocation strategy. Over the last 5 years, we have returned $4.1 billion in share buybacks alone or 13% of our share capital. We also have a long track record of progressive dividends and the 5% increase in our full year dividend that we are recommending this morning builds on our proud history. We have almost 40 years of dividend growth and stability. And yet, having allocated all of this capital and having returned all of this cash to our shareholders, a total of $8 billion over the last 5 years, we now have the strongest balance sheet in our history.

  • I just talked about the $30 billion of additional financial capacity that we expect over the next 5 years, demonstrating the confidence we have and the outlook for our business and the continued strong cash generation. We have a strong pipeline of growth opportunities in front of us, investments in our existing businesses as well as acquisitions, and we remain absolutely committed to maintaining our progressive dividend policy. And I can reassure you, as CFO of CRH, we remain committed to our strong investment-grade credit rating.

  • Taking all of this into account and reflecting the strength of our balance sheet and cash generation capabilities, this morning, we announced our intention to significantly increase our share buyback program with the return of up to $3 billion over the next 12 months.

  • I'm now going to hand back to Randy to update you on the progress we are making in our key sustainability focus areas.

  • Randy Lake - COO

  • Thank you, Jim. And turning to Slide 16. We've talked before about our commitment to leading the industry on decarbonization. And I'm pleased to say that we're raising our ambition even further with a revised target to reduce group-wide carbon emissions by 30% by 2030. Now this is an absolute target. It's not a relative CO2 per ton target. It covers all of our activities across the group and has been validated by the SBTi to be in line with the 1.5 degree framework.

  • We have detailed bottom-up road maps in place across all of our businesses with dedicated teams in place to deliver against those plans. And it keeps us on the pathway to achieving our overall ambition of becoming a net-0 business by 2050. This won't be easy, but we're off to a good start. And I'm happy to report that we reduced our Scope 1 and 2 emissions by 7% in 2022 versus 2021 levels. Great work by the teams. And we continue to be committed to playing our part to decarbonize our business and society to protect the world for future generations.

  • We're also continuing to advance our contribution to circularity, as we've outlined here on Slide 17. We believe increasing circularity in construction has significant long-term environmental, financial and societal benefits. For our business, circularity makes perfect sense. By using more recycled materials and construction, we can preserve our own scarce natural resources and prolong the life of our reserves. It also lowers the cost of construction, both for us and for our customers.

  • Our core materials of cement, aggregate, asphalt and concrete, they're all 100% recyclable. They can be used again and again, producing equivalent or superior product quality. And as you can see on the right-hand side of the slide, we made good progress in 2022. We recycled 42 million tonnes of material. In fact, we're the #1 recycler of any material in the United States. Nobody else in our industry recycles anywhere near as much as we do.

  • And we're the global leader in asphalt recycling. About 25% of every road mile we build in North America is built with recycled materials. And our ambition is to increase that to 50% within the next decade. It won't be easy, but we continue to work with governments, regulators and contractors to further develop policies, guidelines and specifications that promote the use of more recycled materials in construction.

  • We've also made really good progress replacing fossil fuels with alternatives such as recycled waste and biomass. In 2022, alternative fuels represented 36% of the total fuel requirements for our cement plants, making us the global leader in fossil fuel substitution. And we're transferring the significant knowledge and technical expertise that we've built over many years of doing this in Europe to our businesses in North America.

  • And now I'd like to hand you over to Albert, who's going to talk to you a little bit about our advancements in terms of our solution strategy.

  • Albert Jude Manifold - Group Chief Executive & Executive Director

  • Thanks, Randy. And I hope you really got a sense there of how we work in CRH. I mean we had ambitious targets for reducing our emissions to 2030. And again, we revise those upwards again this year. Good to see. And I hope you got a sense from both Jim and Randy, the detail behind what drove the performance this year and indeed, how the financial discipline that Jim referred to ensures that we convert those profits into cash for creating value for you, our shareholders. I will spend 2 or 3 minutes now talking about integrated solutions and how that is accelerating our performance within CRH and what it means.

  • So let me just talk a little bit about why solutions are so important to us, to us as individuals, to our society and indeed to CRH. Well, look, there are certain things we know are going to happen in our world. We know the population of the world is going to continue to grow by about 2 billion people (inaudible) to 2050. We know the fact that those 2 billion people is going to increase the urbanization rate to about 70%. We also know the fact that there is a significant backlog of aging infrastructure in Europe and in the United States and that infrastructure is going to be replaced, renewed and refreshed.

  • So with the growing population and need to repair the infrastructure, there's going to be significant construction growth for people to live, to go to school, to go to work, to live their lives, to move around the world. We also know that we just cannot continue to produce the harmful emissions and consume the scarce resources that we do in construction at the current pace because if we do, we're going to destroy this planet. So something must change. And society and regulators and we, as individuals, are demanding that change. So it's not for us, people like us, like CRH, businesses, who are important people in the industry, to take the responsibility to help change the way our world is built. And that's what solutions are actually about.

  • Let me explain how it works in a practical sense. Just imagine today, in some part of the world, they're building a construction project. It starts by somewhere in the world, they're digging, extracting rock from the ground, it could be iron ore, it could be lumber, from a forest. And they're taking that basic raw material and they're providing it, they're processing it, and they're creating something out of it. So they're extracting rock, they create stone and aggregates. That stone and aggregates is turned it to something else and mixed to something else. It could be turned into cement. It's mixed to create concrete or asphalt.

  • We then take that and we give it to a manufacturer who gets that raw material and creates a product from it. That product is mass, produces the standardized mass product, and that product is then transported to the construction site where it's put together in a very inefficient, labor-intensive way to build construction projects in the world. Projects that are designed by other individuals, architects, engineers and designers, who design back from the front end all the way back.

  • That process has not changed in the century. It's a very inefficient process. There's a lot of waste. There's a lot of emissions. There's a lot of time wasted and it needs to change. And it changes by integrating that chain together and that's what solutions is about. Solutions looks at its taking from the front end, what do you want? I want this construction project. I want this building. I want this infrastructure. Listening to what the designers and architects are saying, putting them in touch with our designers and architects and seeing how we can change the material science of what we process so that it can be less harmful and producing less emissions.

  • We can use more circularity. We can process it in a different way. We can then take that basic material and bring and produce products within factory-controlled environments to produce modular construction of size. That's when it's brought to the construction site, it actually has put together quicker, cheaper in a cleaner way with less labor. All of this reduces waste, it reduces emissions, it increases circularity, it actually helps to build quicker, cleaner and better. Quite simply, solutions simplifies the whole construction process and it lowers costs.

  • So is that it? Well, no, it's not because solutions is dynamic. It continues to evolve. If there are pressures on the system, there are opportunities we see. Bringing innovative products and processes and techniques into the system changes that value chain. It compresses it and it integrates it more, it connects it more. Promoting more sustainable use of resources is very, very important. Increased circularity is very, very important, but that starts at the front end.

  • And now, of course, customers are demanding more that we blend materials together to create final products. You can no longer just be a piece in the jigsaw, saying, I'm producing rock, I'm producing cement. Actually, our customers want you to blend in the likes of plastics, composite materials, metals, steel, to produce the end product. And of course, we're seeing an increasing awareness of the importance of logistics, internal logistics and how we transport to the construction sector. And then people want to say, well, okay, who's going to maintain the infrastructure, who's going to service it, who has the knowledge to do that, as those who produce the materials are the ones who will do that. Quite simply, the manufacturers who have a comprehensive knowledge and a proven capability across materials, products and services will be the winners in this race.

  • So where does CRH fit into all of this? Well, we have always had a differentiated strategy in the building material sector. We've been a materials player. We've been a product player. We provide services. We innovate into high-spec products. We were in distribution. We're at the front end dealing with customers. As Randy has set out to you, we are an industry leader in the area of sustainability, recycling and innovation.

  • And crucially, we are the #1 player in the United States and Europe. And that's important is because they are the 2 most regulated, certified markets in the world in terms of pushing forward increased innovation, increased specifications and how you work. And that forces us, it encourages us, it rewards us to be innovative and to change the way we build our world. And that's why CRH is the proven leader in delivering end-to-end solutions.

  • So proud words, but what does it mean for you, our shareholders? Well, I could have put up 10 slides if I had the time, and quite frankly, if I was allowed, but I can only put up 1 slide. This is our track record across the 3 most important metrics that I look at our business in terms of performance. And it looks across the last 5 years how we do against our peers. Well, you can see profit growth outstrips everybody else. But look at the center column, the margin performance. Every single peer has gone backwards and yet CRH has advanced at a pace of everybody else. That's because it's about solutions. And it's a proven track record of experienced people delivering solutions, not just talking about it, it's delivering it.

  • And then the classic financial discipline of CRH is the platform of which we stand on and we stand here today. We turn those profits into cash. And you can see our cash generation will return about $0.80 of every dollar of EBITDA into cash, which we use for value creation for you, our shareholders. Now the beauty of CRH is not just that we have this big concept of solutions, it's actually how we work together. We have 2 major markets in Europe and the United States, both of them are extremely important to us.

  • The European construction markets have the most exacting specifications set out for construction in the world. It advances sustainability at a pace that no one else does at this time across a broad range of metrics, and it is the driver for innovation. It's not just that the regulators make us and specify constructions that make this innovation, it rewards us for that, it encourages us for that. So a lot of the ideas that we have within our European business, we take those ideas and we bring them to the most profitable construction market in the world, the United States, where we bring them to scale. And the advantage of that is that we get the beauty of the innovation in Europe brought to scale in the United States.

  • And let me give you an example of that. Our Ash Grove Cement business that we bought in 2018. In the 4 years that we have owned that business, we've doubled the profitability of that business. Now of course, the market has been robust in the United States in those 4 years and pricing has advanced, but so have costs. And the improvement we've seen to double the profitability has largely come about by our ability to transfer the knowledge to 100 to 150 engineers, who came to the U.S. and are still there, working on how we process our materials, the types of cement we produce, the increased throughput and actually have the applications that cement can be used in a different way. It has completely changed the nature of the way Ash Grove operates and in fact, it's changing the nature of the way cement operates in the United States.

  • Likewise, actually 25 years ago, when I started in CRH, we had paving products in Belgium and the Netherlands that were taken across to the United States and started a small business called Belgard paving. That now has become APG in CRH and is one of our largest, most profitable and fastest-growing businesses across CRH and outdoor living across the United States. Five years ago, that business came back to Europe, into Eastern Europe, and it's the platform on our paving business, our outdoor living business in Central and Eastern Europe.

  • Likewise, our infrastructure business in the U.S. is coming back into Europe to -- it's got the challenges of the South and West of the United States in terms of building out infrastructure. And as those same challenges are being brought over to Central and Eastern Europe, and we're looking to provide solutions for those businesses there. That interchange, that interconnection, that connection between those 2 businesses is vital towards driving solutions in CRH. But as I said before, it's not static. It continues to change. Of course, we focus on materials and products and our services.

  • But more and more, our design skills, our innovation, our planning, our technology, our logistics all of these are coming in to change the way solutions are being delivered. It is becoming a connected virtual circle, and those who connect the business together to provide that simplification of the whole process is actually changing the way construction projects are being delivered, and it makes sense that we do everything we can to ensure we align ourselves to support the solution strategy.

  • And that's why this morning, we announced a reorganization. It is just really further aligning and refining our organization as we do to ensure that we support solution strategy going forward. So I'm joined by Jim now, who's going to take you through some further thoughts on our organization strategy as we go forward. Jim?

  • Jim Mintern - Group Finance Director & Director

  • So moving to Slide 26. And as we continue to adapt and align our business to the changing needs and future growth opportunities in our industry, we are now transitioning to a new organizational structure for the group. Effective from the 1 January this year, we will report under 2 divisions, Americas and Europe. And within each of these divisions, we will have 2 new segments. Firstly, Material Solutions, which comprises our Essential Materials and Road Solutions. And then secondly, Building Solutions, which comprises our Outdoor Living and our Building and Infrastructure Solutions.

  • This represents the natural evolution of our strategy, providing us with the opportunity to accelerate the development of integrated solutions in both the U.S. and Europe, providing greater integration, cross-selling and cooperation between our businesses and positioning CRH for the next decade of growth in sustainable construction, creating value for our customers and higher profits, margins, cash and crucially returns for our shareholders.

  • Further information on our new reporting structure is available in the appendix accompanying our presentation this morning. And we also plan to provide further financial information in advance of our April trading update.

  • Albert Jude Manifold - Group Chief Executive & Executive Director

  • Thanks, Jim. Just want to look now at this morning at a further part of our announcement, which was our listing considerations and a recommendation that we move our primary listing to North America.

  • When the financial crisis ended in 2013, 2014, it was clear that, that's 4 or 5 years of when there was very low levels of construction in the U.S. and Europe led to pent-up demand. And we saw significant growth across our European and U.S. markets, particularly U.S. market in the run-up from 2014 up to 2020-'21. And that has meant us over that period of time from 10 years ago when we had 50% of our profits generated in the United States to today where 75% of our EBITDA is generated across North America. And given what we're seeing ahead of us, that's going to continue to grow. We believe it will be close to 90% over the next decade or so. And the U.S. is expected to be a key driver of growth for CRH as we go forward.

  • So what's driving that spur on? How is that going to keep driving yourself on? Well, it's a unique complements of events coming together. First of all, I refer to the global financial crisis. That has meant that there was an underbuilt in residential in the United States. Today, as we stand here, there's an underbuilt, the need of about 5 million homes to satisfy the needs that are there. The population of the U.S. is going to grow by 30 million people over the next 10 years. Those people are going to need homes to live in, that is going to drive U.S. construction and residential going forward for the next decade at least.

  • Secondly, with regard to nonresidential, and Randy referred to it earlier, we've had a good core business coming through in data centers and warehouses as the world changes. But on top of that now for the last year or so with the change in geopolitics, we are seeing an increased level of onshoring and reshoring of critical manufacturing back into the United States. And it's not just in the sunbelt, it's actually coming across the Mid-Atlantic and across the Midwest, which is welcome to see in that part of the world, that is going to continue to drive further growth in nonresidential expenditure, but critically it's infrastructure.

  • We have 3 major federal support acts that have come to fore in the last 12 months or so. We've got the IIJA, we have the Inflation Reduction Act, and we have the CHIPS and Science Act. Those 3 acts together provide unprecedented support that's going to drive infrastructure spend across the United States for the next decade. And it leads you to believe not only that, but we're in a fantastic market position. And we can see, looking at those 3 end-use markets that there are significant commercial and operational reasons for us to relist in the United States because it will give us higher organic growth opportunities.

  • In addition to that, listing in the United States will give us higher inorganic growth opportunities. And those 2 combined will allow us to advance at a faster pace our integrated solution strategy across the U.S. going forward, which will be a key driver of growth for our business. So we were communicating directly with shareholders on a face-to-face basis over the next 6 to 8 weeks, and we will update the market further at our update, our trading update, which will be in and around our AGM at the end of April.

  • So if I can just briefly turn to outlook. Now I'm not going to repeat what has been said before. We talked about the United States in terms of infrastructure is strong going forward into 2023 and beyond for the reasons we just set out. Nonresidential is in pretty good shape. Again, we're going to see an increased onshoring and reshoring of activities here, which is going to continue to drive that market. And U.S. residential is a one-way bet. Okay, we may have the speed bump over the next 6 to 8 months with regard to interest rates, but slowly but surely, the need for housing is going to overtake and that will be a key driver for growth in CRH in the next decade.

  • And Europe, a crucially important part of our business going forward. Central and Eastern Europe is a jewel in our crown. We're the largest building materials player there, a market that is 70% of the size of the total U.S. construction market. It just happens to be 25 years behind the U.S. construction market, and there is decades of growth and profitability ahead for us there, and our Western European business, significant market positions in a market that needs significant investment in infrastructure and repair and maintenance and of course, crucially, that is the center of innovation and design and new technologies that we can take and bring out across our group in the years ahead.

  • So pulling that all together specifically with regard to 2023, you can see we have a clear growth strategy involved with the moment. We're delivering against that. Integrated solutions is the differentiating factor that's delivering the higher growth, more profits and more cash. Of course, it all starts with being best-in-class operators, never ever, ever forget that, the pennies matter in our industry. We will continue to lead on sustainability, on decarbonization and crucially more and more on circularity and innovation. Of course, we will continue to reshape and reposition our portfolio. It makes sense to do that. But also in a growing business where you've got the solution strategy evolving, we will be adding on to the edges of that as we have done in the last 24, 36 months.

  • But no matter what we do, you can be guaranteed, as Jim set out, the financial discipline that's been at the core of CRH for 50 years will remain. We have the strongest balance sheet in the history of CRH. It didn't happen by accident and that will mean that we will lead the industry in terms of cash conversion and cash generation.

  • And as Jim mentioned, that leads us to believe, over the course of the next 5 years, we will have more than $30 billion of financial capacity to spend for our shareholders in terms of internal investments, M&A and rewarding our shareholders themselves. And with regards specifically to 2023, against that backdrop, we think we're in for a good year and another year of continued progress for CRH.

  • Okay. So look, we've come to the end of the presentation part of this morning. I've now been joined on stage by Tom Holmes, our Head of Investor Relations; and Jim and Randy have come back to join me on stage, and we're going to go to the questions. I know that you've been sending in. I'll pass it over to Tom now. Tom?

  • Tom Holmes - Head of IR

  • Thanks, Albert. Good morning, everyone. Okay, so there was a lot in that, and we've certainly got plenty to talk about. Lots of questions here, as Albert said. Please keep them coming. We'll try to get through as many as we possibly can. Naturally, a lot of overlap and recurring themes, I want to try and group them here as best we can to make sure we have time to get through all of the key topics.

  • So let's start with trading. Albert, first to you. Could you speak to activity levels and margin performance in Q4 and what you're seeing in early 2023?

  • Albert Jude Manifold - Group Chief Executive & Executive Director

  • Okay. Maybe I'll just take that question first. I might pass to Randy and Jim for their comments. So maybe I'll just take quarter 4 last year 2022 and ask Randy and Jim -- randy, you might take the U.S. and Jim, you might just talk comedown to Europe.

  • Look, we finished out the year quite strongly in 2022. It was a very challenging year. And actually weather didn't really help us actually in quarter 4. But actually, we had a record performance in quarter 4. And again, that's the solutions continue to deliver on. And what I liked about quarter 4 was that actually our margin moved ahead in quarter 4. We had a good first half of the year with a challenging quarter 3, but quarter 4, we moved ahead. And I often talk about how we get behind or get ahead on pricing.

  • I think we got behind in pricing in quarter 3 because costs moved on very quickly, and we couldn't price up. But actually, in quarter 4, we started to go ahead. And I think it sets us up well for this year. So good activity levels as we finish out 2022 and good margin progression. But specifically in regard to '23, Randy, you might just take at the Americas?

  • Randy Lake - COO

  • Yes. Maybe just to build on that a little because I think you have to look at Q4 in terms of some of that momentum. We're coming out of Q4 in a relatively positive pricing environment. So the ability to manage the cost profile in Q4 kind of translating into good pricing as we begin to enter into the season of 2023 is encouraging. So that's a good base to start from. In terms of kind of the individual market segments, I talked a little bit about the res market already. We are seeing a bit of a slowdown in terms of single-family, it's pockets based upon the geographies that we cover. But again, the remodeling, the RMI work remains pretty resilient.

  • So I think net-net or it should be a relatively positive picture for the U.S. in terms of overall res. That nonres space, we talked a bit about, maybe a transition that's happening there from some of the data warehousing logistics into more of that onshoring, chip manufacturing, some very large projects that are in the pipeline there. So overall, it's going to be relatively steady as we go into 2023.

  • And then it's certainly positive from an infrastructure standpoint. The quantum of activity that's taken place both from the federal and the state level that translates down to those local markets. Early indications are we have a nice positive momentum as we begin to kick off the spring season.

  • Jim Mintern - Group Finance Director & Director

  • Yes. And in terms of Europe, Tom, we had a strong Q4 in Europe, despite some very significant headwinds, right, in terms of Ukraine, in terms of FX and in terms of inflation, and we talked about it last November in the trading update. We saw that kind of pricing momentum coming out in Q3 and have built month-on-month as we came to the end of '22 and kind of exited '22 with good pricing momentum. Also across our businesses, where we play mainly in Europe, we had a good EU -- we had a good infrastructural underpin in terms of activity levels and also a lot of self-help measures as well going on across the business as well. So a good strong finish in Q4 in Europe.

  • Albert Jude Manifold - Group Chief Executive & Executive Director

  • Okay. I'd say, look, it's a difficult time of the year. We get asked this question every year at this time in the year, it's difficult to say because it's very early days. But when we look at our backlog, if we look at our order books, look at a sense of the business, I look at the momentum that's been coming through from quarter 4, it certainly looks good in terms of the fundamentals and activity levels and pricing, that moving ahead of the cost curve on pricing is an important part for us, that combined with our solution strategy, I think that bodes well for this year.

  • Tom Holmes - Head of IR

  • Okay. Just maybe picking up on the funding backdrop for infrastructure and nonresidential, Randy, we hear a lot about the IIJA. Could you talk a bit more about what you're seeing there? And Jim, in Europe, where specifically are we seeing those EU funds being deployed?

  • Randy Lake - COO

  • Yes. So when you think about the federal or the infrastructure funding environment, I think we probably go back to comments we made in the middle part of last year in regards to when we anticipated seeing dollars actually make their way to the bid table. We said it would be kind of early 2023 and that's what's happening now. So we're beginning to see work individual projects come through, which is a combination of IIJA, but also some of the new initiatives that the states have taken on. And so that bidding activity would reflect kind of the anticipated levels that we thought we would see, which is a positive.

  • The part of the IIJA Act, which sometimes goes unnoticed, is the significant amount of money that's spent or invested for water, energy and telecoms that really -- we, again, are seeing that in our backlogs in our infrastructure products business. So it's the combination of our products and services that allow us to really penetrate some of the significant markets we're in and when you think about the total dollars, greater than 20% of the IIJA funding is going to go into our top 5 states, the likes of Florida, Texas, Utah and so forth up in the Pacific Northwest.

  • So I think we're well positioned for the dollars that are coming our way. And then maybe if you move into the nonres, the Inflation Reduction Act, along with the CHIPS Act as well, that's a major investment in terms of some of the underlying infrastructure that onshoring of semiconductors, maybe some of the battery plants that we're seeing, and I think Albert talked about it even in the parts of the country in the Midwest, where we have really nice positions. The combination of our IPG, APG and Materials business in the Ohio, Michigan area, we're seeing quite a robust level of activity there.

  • Albert Jude Manifold - Group Chief Executive & Executive Director

  • Yes. And actually, that's what really we should (inaudible) combination of those 3 businesses coming together in that area, in the specific area of nonres is really starting to come to the fore will be a unique driver. We talk a lot about infrastructure and federal fund infrastructure, actually, that work coming through is going to be an important -- growing important part of our business.

  • Jim Mintern - Group Finance Director & Director

  • Yes. And in terms of Europe, Tom, if you look, firstly, maybe a fast-growing Central and Eastern European business, particularly countries the main markets for us is kind of Poland, Romania, Hungary and Slovakia. These are countries which have historically a very significant infrastructural deficits in terms of road, water, energy, health and education, and there are multiyear EU funding programs to address that deficit. So we're just starting out on those programs, and that has provided a very good volume backdrop to that region.

  • If you look at some of the other main markets first in Europe as well, in France, where we play in France, up in the Northeast, you have the [Grand Paris] project, you also have the [Seine-Nord Canal] starting out and then you have Olympics as well, which again is kind of providing a good volume backdrop to us. And then in the U.K., the largest infrastructure project in Europe, HiSpeed II, we're the preferred supplier on that project, and also the Thames Tideway project. So a good infra underbuild across our main markets in Europe.

  • Albert Jude Manifold - Group Chief Executive & Executive Director

  • Again, the common theme that runs across both the European and the U.S. businesses and lead the nonres and again, that nonres onshoring is starting to happen in Europe. Again, it's that complex, large, difficult construction is perfect for solutions because it's into modular construction, it's off-site, it's simplifying. People just want the project in place quick at the right pace, the right speed and right quality. We play to our strength in that area.

  • Tom Holmes - Head of IR

  • Randy, one here. U.S. backlogs and order books, what are they telling you about trading momentum across the business right now? And actually, Jim, same to you on Europe actually.

  • Randy Lake - COO

  • Yes, I mentioned it in the core of the presentation. Backlogs would reflect the increase in activity produced by the IIJA as well as the Inflation Reduction Act. So backlogs are strong. They're up over last year volume, which is important for sure, but probably more indicative of the positive nature is the margins in that backlog. And -- so it's good to see. I mean, to me, that indicates kind of a good distribution in the quantum of work across the U.S. So that's encouraging. And that would be reflected not just in our -- obviously, we're the largest road builder in the country, so that's reflective there, but also our Infrastructure Products group would have very similar backlogs with improving margins.

  • Some of the -- the order book, maybe something we keep an eye on for sure in the springtime is really how is our APG business doing with our core customers in our retail customers, the likes of Home Depot and Lowe's, as the pro channel. And the early sell-through is positive. So that's good to see. And we'll keep an eye on that as the year progresses for sure, but early indications are we have positive momentum in that sector as well.

  • Jim Mintern - Group Finance Director & Director

  • Yes. When we look at Europe, Tom, I mean 2022 was a challenging year for Europe. And I don't expect the same in '23. We just talked about the kind of good infra underpin that's there for a lot of the activity we have across our main markets, that's offsetting some of that residential softness we see. But we do have an improving energy backdrop. And as I said, we've got that pricing momentum coming out of Q3, Q4 heading into '23, so optimistic in terms of pricing. And in fact, this will be the sixth consecutive year in Europe of good price progression.

  • Tom Holmes - Head of IR

  • Albert, on margin, could you expand on the 2022 performance? Where can margins go from here? Is this a peak for the business?

  • Albert Jude Manifold - Group Chief Executive & Executive Director

  • Well, is it a peak? I get asked that question every year. And the answer of that question is, no. And could it be by the next year? And the answer to that question is, no, it will be better next year. Not because of any great force, I don't have a crystal ball, but I can see the way solutions are evolving. If you could just go back and look and see where solutions started a number of years ago, a decade ago, and now at this stage, it's not really in our Road Solutions business in North America. That used to be just a plain aggregates business, and then we start to turn those aggregates into asphalt and then you provided the asphalt, the customers said to us, well, more and more, could you provide the off-ramps, the on-ramps, the bridges, the culverts, all of which we do.

  • And not only that, will you maintain the road for me in terms of marking it, cleaning it, all that stuff, and start patching it. All that is part of the solution. So it started out 10 years ago, and we never envisaged it would be this. Our customers pulled it in that way. And if I look at the way our solutions business is evolving across our APG business, our IPG business across some of our other businesses that we're working on, I can see more and more building out from those core platforms in terms of profitability.

  • Also, I look at some of the deals we did over the course of the last year, but look at the Rinker deal, look at the -- in terms of Texas, in terms of adding the pipe business to our downstream platform businesses in Texas, look at the [Henkel] deal in terms of the road resurfacing business. I look at the (inaudible) business, the APG business in California. I look at the biggest deal we did last year, Barrette Outdoor that adds to our APG portfolio. All of these are changing the very nature of CRH.

  • We talk about repositioning. We talk about reshaping. This is active repositioning and reshaping. And it doesn't just change what we supply to our customers. It changed the profits of our business. It changed the margins. It's behind that 500 basis point margin increase that we talked about today. So I don't think they're at the end of the margin story. I think we're only just starting that story at the moment. So it will continue to evolve, and we'll update our markets as it becomes clear to us.

  • Tom Holmes - Head of IR

  • Jim, one for you. Big year for M&A, as we've talked about, a big step-up in the buyback also. Could you talk more generally as to how you think about capital allocation?

  • Jim Mintern - Group Finance Director & Director

  • Yes. We exited '22, as we said, with the strongest balance sheet ever at 0.9x net debt to EBITDA. That's unusually low for us. We have communicated that through the cycle that we're comfortable with net debt to EBITDA up to 2x. And that's really a testament to the very strong cash generation and the cash conversion. And what's been driving that is that we're really beginning to benefit now today from a lot of the portfolio repositioning that we've been doing for the last 6, 7 years.

  • We fundamentally have a structurally better business today, which is growing faster, delivering that margin increase year-on-year. And that's coming true in terms of cash generation and cash conversion, and that came true in terms of the strong net debt figure at the end of the year.

  • In 2022, that enabled us to invest $3.8 billion in terms of total -- between M&A activity and expansionary CapEx. We also returned $2.2 billion to our shareholders, right, a $1.2 billion on a share buyback and $1 billion in dividends. And indeed, when you go back over the last 5 years, we've allocated $20 billion in terms of expansion in M&A activity and cash return to our shareholders.

  • And that all contributed to that very strong cash position and net debt position at the end of the year. And what we decided to do is we should reward our shareholders who supported us for the last 5, 6 years, supported the strategy and enabled us to arrive at this strong position. And we announced this morning the increase in the share buyback for the next 12 months, starting in April of up to $3 billion. And that's a real testament to how we see the future growth opportunities of the business, the future margin expansion and the future cash conversion.

  • Tom Holmes - Head of IR

  • Just to follow up on that, Jim, the increase in buyback, does that signal any change in appetite around M&A? And how is the pipeline?

  • Jim Mintern - Group Finance Director & Director

  • No, absolutely, not, Tom, no. I mean, we have -- we still have a very strong mandate to grow the business. In 2022, we spent $3.3 billion. It was our third biggest year in terms of M&A. We have that strong balance sheet. You look at our core businesses, our core markets, we still operate in a very fragmented business in the U.S., the top 10 producers in the U.S. account for less than 30% of the business. We still have geographic white spots, and we've been beginning to see a real acceleration of a build-out of our solutions business in Europe. And I think certainly, that strong balance sheet gives us that optionality and capability to take advantage of those value-accretive deals into the future.

  • Albert Jude Manifold - Group Chief Executive & Executive Director

  • In fact, I'd say, Tom, I mean, all of has been around a long time, and we've all seen recessions, we've all seen recoveries, and we are all aware where we are. We are at the start of a strong growth phase across both of our major markets. And my experience, my knowledge tells us now is the time where you can be progressive on M&A because it's not just what you buy or what you pay for it, it's when you buy it is crucially important. I know that you would have seen up to 2013, 2014, the global financial crisis came to an end.

  • What did we do? We drove M&A for a sustained period of 4 or 5 years, and we drove value M&A, as Jim says, that's what delivers the cash, the profit this morning. We didn't do it in 2022. We did it from 2012 to 2021. That's what delivered the profitability. And our job now doing M&A is actually to ensure that we capitalize on the opportunity. We have the capacity. We have the ambition, and we've got the capability to do that. So really it's within our business to drive M&A during these good times because that's how you can really drive growth going forward for decades ahead.

  • Tom Holmes - Head of IR

  • Albert, just looking here at the reorganization of the business. Can you give a bit of color as to the thinking behind it and the benefits you see for the business?

  • Albert Jude Manifold - Group Chief Executive & Executive Director

  • Reorganization. Yes. Okay. We are changing the way we report. We're changing the way we connect our business within CRH. But in fact, really what it's doing is crystallizing what actually has been happening within our business, as we speak. I mean more and more, I refer to just take the Road Solutions as an example. But within CRH, different companies provide the road, different companies provide the on-ramps, the off-ramps, the bridges, the culverts. But we've got one customer. And the more we make sure the connection between our business internally represents a unified approach to that customer in terms of understanding what they need, their design skills, their engineering needs and how we can back that in, in terms of not only how we supply the products, but the integrated nature the way we support products, the better it is for us.

  • So that's what this reorganization is about. It's about aligning our organization, our workflow, what we do with our strategy of delivering complete end-to-end solutions for our customers. So it doesn't change anything with CRH. In fact, it reinforces our M&A strategy, reinforces our growth strategy in terms of building out and offering more and more to our customers.

  • Tom Holmes - Head of IR

  • Okay. Okay. Great. Actually, another one on this. does the reorganization change your M&A strategy at all? Do you think about that differently as a result?

  • Albert Jude Manifold - Group Chief Executive & Executive Director

  • I just said it, it doesn't think about it. Actually, it adds -- gives us more opportunity. If I look at some of the deals we've done over the last month, the Barrette deal is a quasi-step out into a new space for us. But actually, more and more, we were pulled there by our customers. They wanted -- our major customers wants us to get involved in the fencing area. More and more, we've been pulled into areas of dealing with plastics, composite materials because that becomes important to our customers in terms of how we provide the solutions.

  • So will it changes, no, because the platforms are hugely important. Our core businesses are our core businesses. The regions that we're in our good. We'll expand those core regions as they grow. But what it will do is it'll pull it into new areas in terms of not only the products, but design, skills and engineering, which is what the innovation fund is actually all about looking at the very areas where we see the opportunity. So it's advanced evolution of the M&A model rather than changing in any way, shape or form.

  • Tom Holmes - Head of IR

  • Okay. Okay. Just changing tack here a little. Albert, no surprise, a lot of questions here on the U.S. listing. Could you elaborate on the thought process there and what benefits you expect it to bring across the business?

  • Albert Jude Manifold - Group Chief Executive & Executive Director

  • Yes. Look, I spoke about this morning, given what we're seeing in North America, given the increasing importance of North America to us, it makes eminent sense to us to look and say, well, actually, where are we best listed. It's something we kept under review. We constantly reshape our thinking, our portfolio, we challenge ourselves. And we've always told you, we keep our listing under review. Given what we're seeing with regards to the opportunity in North America with regard to infrastructure, res and nonres for the next decade, for us, it makes perfect sense that we relist our primary listing to the United States because we see significant commercial and operational benefits in doing so for organic growth alone.

  • For inorganic growth opportunities, having a primary list in the U.S., again, further enhances that growth opportunities, particularly as we look at enhancing and developing our solution strategy, which is a winning strategy in the best and most profitable construction market in the world.

  • This is what we should do. And it's our job to communicate those facts to our shareholders. That's what's behind this. Nothing else. It doesn't mean -- there's no comment on Europe, no comment on the U.S., it's the right thing to do for our business. And then we've talked about shareholders in the coming weeks to explain that, why is that the case.

  • Tom Holmes - Head of IR

  • Related one here, Albert, maybe sticking with you. In light of the reorganization and the U.S. listing, could this be seen as a first step towards some form of separation of the group?

  • Albert Jude Manifold - Group Chief Executive & Executive Director

  • Yes. Again, if you look at the slide deck this morning, deliberately talking about how the importance of Europe is and the importance of what we do in innovation in Europe and bring it to the U.S. And look, maybe, Jim, I'll ask you just -- I mean you have a comment, and Randy as well, you're both colleagues of mine here, you see this, you live this every day. Jim, you?

  • Jim Mintern - Group Finance Director & Director

  • Tom, I think on any proper analysis, it doesn't make any sense to talk about a breakup of the group. We -- this CRH is a group was put together over 50 years ago, right? It operates in 29 countries, and it's a fully integrated business. And to -- if you're going to look at splitting up CRH would result in significant cost first, also it'd be complex, it'd be very timely, and there will be very, very significant the synergies running into many billions of dollars from that perspective. And I think for me, when you look at that time factor as well, that will be a huge distraction factor right now when we have such a period of opportunity ahead of us.

  • And you look at Europe, we talk about. I mean Central and Eastern Europe is one of the fastest-growing parts of CRH for the last 5, 6 years. And when you look at Europe in its totality, there's very significant opportunity for us to build out our solutions-based business in Europe, transferring some of that knowledge that we've been building out in the U.S. back into Europe. Albert talked about it earlier. So no, that just doesn't make sense.

  • Randy Lake - COO

  • And I think the word -- one of the words that Albert just used, which actually resonates, always has resonated with me is the connected nature of our business. Now that relates to serving our customer, making sure that we have the right pieces of our portfolio to be able to address the future needs, but it also has to do with kind of how we operate and maximizing the operational performance of our businesses.

  • You think about how far ahead Europe is -- it's a very regulated construction market from a sustainability standpoint. It is kind of a window to the future for the U.S. And so we use a lot of what's happening in Europe as a means to get ahead of coming trends in the U.S. I think that's a competitive advantage and to use that kind of capability and technical skills.

  • And I know Albert already talked about it, but the light of kind of operational performance, I mean, you double the profitability of Ash Grove in 4 years that -- I'm sure we would have made progress over the years, it wouldn't have happened in 4 years had we not used all the experience and the time and resources from Europe to come over, not only just to teach, but to be embedded in to accelerate the operational performance. That, to me, it's always operational focus, has always been a core focus of CRH, but those are tangible real examples. And you could talk about all kind of other examples going from IPG, APG back into Europe. I mean there's -- that's real value that's brought to the...

  • Albert Jude Manifold - Group Chief Executive & Executive Director

  • I think that's the point, Randy. I mean Jim is right to highlight the fact the significant cost if you were to separate. I mean I'm aware of those costs. It's very significant. But I am an opportunist, and I would think -- I mean, there would not be Ash Grove, there would be no APG story in the U.S. if it wasn't for the skills we transferred across. And it's not just looking back, what about the Ash Grove of tomorrow? What about the APG or the IPG tomorrow? Why didn't I have that opportunity? We have knowledge and skills. They're the same markets, but they're different, and they're driven by different things. And the ability, the unique ability, no one else has that capability across the breadth of products that we have. And for me, I'm looking up the curve. I'm looking for the opportunity to grow and to grow profitability. And together, the opportunities are greater.

  • Tom Holmes - Head of IR

  • Okay. A number of questions here around again, U.S. listing, the mechanics of it. Jim, could you add any further detail on things like time line, shareholder approval index inclusion?

  • Jim Mintern - Group Finance Director & Director

  • Yes. Tom, we're going to now headed to a period of 6 weeks of engagement with our shareholders, where we talk this first with our shareholders, quite rightly with our shareholders first. And we're not going to get into time lines now. Let's have that period of interaction engagement with our shareholders. And we give an update at the end of April as part of our trading update.

  • Tom Holmes - Head of IR

  • Okay. Okay. Thanks. And just conscious, we're a little tight on time here. Jim, a couple of quick ones here, if you don't mind. CapEx guidance for 2023, tax rate same, and maybe scope effect from acquisitions?

  • Jim Mintern - Group Finance Director & Director

  • Yes. For CapEx, I think it's good to guide kind of $1.6 billion to $1.7 billion. In terms of scope, the impact on '23 of the acquisitions that we undertook in '22, it should be a positive, about $150 million. And the third one, again, Tom, was?

  • Tom Holmes - Head of IR

  • Scope effect for acquisitions.

  • Jim Mintern - Group Finance Director & Director

  • Scope was about $150 million. Yes, I think there was one more.

  • Tom Holmes - Head of IR

  • The CapEx, tax rate and...

  • Jim Mintern - Group Finance Director & Director

  • Tax, sorry. Tax rate, I think, for '23 should guide about -- effective tax rate for '23 would be about 22%.

  • Tom Holmes - Head of IR

  • Perfect. Okay. So final one to you, Albert, on outlook. You mentioned a year of progress. How do we interpret that for the year ahead?

  • Albert Jude Manifold - Group Chief Executive & Executive Director

  • Look, early season, I'm not going to be boxed into any corner here. I've been very clear. The fundamentals in our 2 main markets are very strong. We're well funded. We have a clear plan for performance improvement this year. We have a very successful solution strategy that continues to be executed. It's a multiyear strategy. It's not a '23 issue. It's a '23 to '33 issue. Where at the end of that is? I don't know. I don't see it anytime soon.

  • I think we're in a good place, our end-use markets are solid. We're the #1 player in Europe and the U.S. We know where we're at. We have a job to do. We're here this morning talking about this because we need to tell you about 2022, but quite frankly, all our minds are on 2023 and beyond. So it is going to be another good year for CRH. The extent of that progress will become clearer as we report to you later on this year.

  • Okay. I'm getting wound up behind the camera here. We're about 2 or 3 minutes over a limit. I want to thank you all for your attention this morning. As always, we make ourselves available through the IR team for any further questions you might have. But until the next time we update you, which I think is around the AGM at the end of April, until then, stay safe. I'll talk to you then.