Concrete Products

SEP 2017

Concrete Products covers the issues that attract producers of ready mixed and manufactured concrete focusing on equipment and material technology, market development and management topics.

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Dublin-based CRH Plc entered the U.S. nearly 40 years ago, a deal for Idaho's Amcor Precast seeding a broad, deep portfolio under the Oldcastle Inc. banner. Now des- ignated Americas Products and Americas Materials in the CRH group, the Oldcastle Architectural, Materials and Pre- cast businesses have long since grown to command top or top five U.S. market positions in block & paver, packaged dry mix and raw materials, ready mixed concrete, aggre- gates, and drainage- or utility-centered precast products and structures. Through more than three decades of market develop- ment, Oldcastle differentiated itself from other multinational-backed companies by keeping nearly every asset inherited in a perpetual slew of acquisitions. While peer operators might buy and break up certain businesses, Oldcastle held onto acquired properties—even when deals brought stakes in market segments where it would be a limited player. The recent exit of clay brick and concrete roof tile operations indicated the company has changed its tune. CRH is now set to dispatch a business representing 16 percent of Oldcastle's $15 billion-plus in annual revenue. Late last month it announced an agreement to sell the Allied Building Products-anchored Americas Distribution business for $2.6 billion to Beacon Roofing Supply Inc., Herndon, Va. East Rutherford, N.J.-based Allied distributes roofing, siding, windows, doors, wallboard, and suspended ceiling systems across 208 locations in 31 states. It positions Beacon Roofing, North America's largest publicly traded wholesale roofing and building materials distributor, with annual sales upward of $7 billion, plus 593 branches in all 50 states and six Canadian provinces. Referencing Allied-Beacon and the concurrent acquisition of a German lime producer, CRH Chief Executive Albert Manifold observed, "These transactions demonstrate the strategy of adding value through the efficient allocation and reallocation of capital, and in particular deployment of capital into an attractive growth market in Europe—while maintaining our financial discipline." CRH acquired Allied in 1996 amid a surge of deals expanding the Oldcastle Architectural, Products and Materials divisions, and effected a growth strategy in roofing, siding, window and interior building commodity distribution around bolt-on deals, selective greenfield developments, and private label offerings. "While the business has delivered significant improvement in performance and returns in recent years, the absence of value accretive acquisition opportunities and a lack of visibility as regards a route to market leadership, has resulted in [the] decision to divest this business now at an attractive valuation," CRH noted in the Allied-Beacon announcement. "Proceeds will be reallocated to value creating acquisitions and investments." Deals would appear likely on both sides of the Atlantic; those boosting U.S. and Canadian operations should have priority. Oldcastle Materials, which earlier this year saw one of its largest bolt-on acquisitions of late—Mulzer Crushed Stone of Indiana—is the most profitable CRH division. In 2016, it accounted for 28 percent of revenues and 40 percent of operating profit. The Americas Products businesses, including Architectural and Precast, are likewise solid performers, accounting for nearly 16 percent of CRH revenue and 20 percent of operating profit last year. By comparison, Americas Distribution represented 8 percent and 2.8 percent of 2016 revenue and operating profit. Margins in roofing, siding, window and drywall distribution are no match for the returns that CRH, through the Oldcastle brand of market leadership and pricing discipline, enjoys in aggregates, ready mixed and manufactured concrete. EDITORIAL BY DON MARSH SEMCO PUBLISHING CORPORATE OFFICE 8751 East Hampden Avenue, Suite B-1 Denver, Colorado 80231 U.S.A. P: +1.303.283.0640 F: +1.303.283.0641 PRESIDENT/PUBLISHER Peter Johnson, pjohnson@semcopublishing.com EDITOR Don Marsh, dmarsh@concreteproducts.com ASSOCIATE EDITOR Josephine Smith, jsmith@semcopublishing.com PRODUCTION MANAGER Dan Fitts, dfitts@semcopublishing.com GRAPHIC DESIGNER Michael Florman, mflorman@semcopublishing.com PROJECT MANAGER Tanna Holzer, tholzer@semcopublishing.com CIRCULATION Juanita Walters, jwalters@semcopublishing.com SALES U.S., CANADA SALES Bill Green, bgreen@concreteproducts.com Tel +1 414 212 8266 GERMANY SALES Gerd Strasmann, strasmannmedia@t-online.de Tel +49 2191 93 1497 SCANDANAVIA, UNITED KINGDOM AND WESTERN EUROPE SALES Jeff Draycott, jeff.draycott@womp-int.com Tel +44 (0) 786 6922148 Colm Barry, colm.barry@telia.com Tel +46 (0) 736 334670 JAPAN SALES Masao Ishiguro, ma.ishiguro@w9.dion.ne.jp Tel +81 (3) 3719 0775 AUSTRALIA/ASIA SALES Lanita Idrus, lidrus@asiaminer.com Tel +61 3 9006 1742 Concrete Products, Volume 70, Issue 9, (ISSN 0010-5368, USPS 128-180) is published monthly by Mining Media Inc., dba Semco Publishing, 10 Sedgwick Drive, Englewood, Colorado 80113. Periodicals postage paid at Englewood Colorado, and additional mailing offices. Canada Post Publications Mail Agreement No. 40845540. Canada return address: Station A, PO Box 54, Windsor ON N9A 6J5, Current and back issues and additional resources, including subscription request forms and an editorial calander, are available online at www.concreteproducts.com. SUBSCRIPTION RATES: Free and controlled circulation to qualified subscribers. Non-qualified persons may subscribe at the following rates: USA and Canada, 1 year $72.00, 2 year $119.00, 3 year $161.00. For subscriber services or to order single copies, write to Concrete Products, 8751 East Hampden Avenue, Suite B1, Denver, Colorado 80231 USA; call +1.303.283.0640 ext. 207 (USA) or visit www.concreteproducts.com ARCHIVES AND MICROFORM: This magazine is available for research and retrieval of selected archived articles from leading electronic databases and online search services, including Factiva, LexisNexis, and ProQuest. For microform availability, contact ProQuest at 800-521-0600 or +1.734-761-4700, or search the Serials in Microform listings at www.proquest.com. POSTMASTER: Send address changes to Concrete Products, PO Box 828, Northbrook, IL 60065-0828. REPRINTS: Concrete Products, 8751 East Hampden Avenue, Suite B1, Denver, CO 80231 USA; P: +1.303.283.0640 ext. 207, F: 1+303.283.0641, www.concreteproducts.com PHOTOCOPIES: Authorization to photocopy articles for internal corporate, personal, or instructional use may be obtained from the Copyright Clearance Center (CCC) at +1.978.750.8400. To obtain further information, visit www.copyright.com COPYRIGHT 2017: Concrete Products ALL RIGHTS RESERVED 4 • September 2017 www.concreteproducts.com dmarsh@concreteproducts.com Circuation audited by Official Media Partner Oldcastle-style capital reallocation

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