CRH Earnings: Full-Year EBITDA Guidance Tops Expectations as Price Increases Persist

Double-digit price increases across product lines supported narrow-moat CRH’s first-half organic revenue and EBITDA growth of 4% and 7%, respectively. We expect that the favorable pricing environment will persist underpinned by an acceleration in infrastructure spending from the $1.2 trillion Infrastructure Investment and Jobs Act, which will support structurally higher profitability. We raise our fair value estimate to $51 from $47.5, which reflects a 2023 EBITDA margin of 17.9% compared with our initial expectation of 16.3%, due to higher selling prices and easing energy costs. However, our GBX 3,950 valuation remains unchanged due to the depreciation of the USD against the GBP. While we confirm our view that CRH is the most defensive of the European-listed building materials manufacturers, we believe shares are fairly valued, having risen 30% year to date.