CRH's (CRH) CEO Albert Manifold on Trading Statement Call - Earnings Call Transcript

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CRH PLC (NYSE:CRH)

Trading Statement Call

November 17, 2016, 03:30 ET

Executives

Senan Murphy - Group Finance Director

Albert Manifold - Group Chief Executive

Maeve Carton - Group Transformation Director

Analysts

Robert Gardiner - Davy

Gregor Kuglitsch - UBS

Robert Muir - Berenberg Bank

Rajesh Patki - JPMorgan

John Fraser-Andrews - HSBC Global Research

Gerard Moore - Investec Bank

Arnaud Lehmann - Bank of America Merrill Lynch

Will Jones - Redburn Partners

Manish Beria - Societe Generale

Mike Betts - Jefferies

Operator

Welcome to the CRH trading update for November 2016. This call is hosted by CRH Chief Executive, Albert Manifold. [Operator Instructions]. Please, go ahead, Mr. Manifold.

Albert Manifold

Good morning, everybody, Albert Manifold, CRH Group Chief Executive here. You're very welcome to the CRH conference call this morning which accompanies the release of our trading statement.

Now our update this morning provides details of our trading performance for the nine months to September as well as some details on quarter 3 itself. With me, this morning, on the call is Senan Murphy, our Group Finance Director; and Maeve Carton, our Group Transformation Director.

So this morning, we're planning to take about 20 minutes to talk you through the key points of our statement. Now, you'll find a slide presentation on the CRH website which, if you have access to it, will certainly help in guiding you through our conversation this morning.

Afterwards, we're going to take -- we're going to be available for any questions that you may have and we're aiming to finish this call by about 9:15.

So, if you have the presentation available to you, I'd ask you to turn to that presentation, as I say which is on the CRH website. Looking at the first slide, slide 1, of that presentation, I'd like you to focus on the key messages from CRH with regards to our trading to date this year. And we'll discuss these in details, about our performance later on and as we go through these slides.

Our business has continued to perform very well and very much in line with our expectations. In trading terms, our sales in the nine months to September increased by 6%, while EBITDA increased at an even stronger rate of 14%; clear evidence of the continued progress that our Group is making. And, I'm particularly happy to report that our margins and returns continue to improve.

We have again continued to demonstrate our prudent financial management and cash generation capability. The business continues to deliver a strong cash flow and we now expect our net debt to EBITDA ratio at the end of the year to be below 2 times. We're again confirming, this morning, our guidance for the full-year EBITDA which will be -- which we expect to be in excess of €3 billion. Now, this EBITDA is going to be delivered in the face of very significant currency headwinds, so I think it's really an excellent performance across the Group.

If I can ask you to slide 2, you get a good overview of the progress we're making and the work that we're doing. As you can see, in the nine months to September, we generated EBITDA of €2.4 billion on revenues of just over €20 billion; €20.4 billion, in fact. And that resulted in an EBITDA margin of 11.7%. Comparing our performance to last year, on a pro forma basis, it shows a 14% increase in our EBITDA and a 90 basis point improvement in our margins. Again, clear evidence of the progress our Group is making.

If I can I ask you to turn to the next slide, on slide 3. Here we show the headlines of our trading results for the nine months of 2016 by region. So, starting with Europe, where the performance of our business has continued to improve in both revenue and EBITDA terms. The positive momentum we observed in most of our key markets in the first half of the year has been maintained in the third quarter.

In the Americas, we had experienced a strong start to the year in the first half, due to very favorable early season weather which caused some of our volumes to be pulled forward.

As a result and as we expected, momentum in the Americas in quarter 3 slowed somewhat to a more modest pace of growth. Nevertheless, we remain well ahead for the first nine months, when compared to last year and very much in line with our expectations. Sales for the Americas were ahead by 8% for the first nine months, while EBITDA increased by 21%. There's some very good profit delivery again from our Americas business.

Turning to Asia, where we saw a continuation of the first-half trends, sales were 4% and EBITDA 7% ahead for the nine-month period to the end of September.

So, taking all this together, I'm pleased to report that at a Group level we delivered good profit growth across all divisions.

Now, I just want to take you briefly through each of the regions in a little bit more detail, so if I can start with Europe on the next slide, on slide 4. And here we can see the positive momentum we saw in the first half of the year has been largely maintained with good growth in both sales and EBITDA for the first nine months. In the Europe heavyside division, overall cement volumes were ahead in most markets.

I should add that we've included the volume performance of our businesses by country in the appendix of this presentation to give you more detail. It's, actually, on slide 9 and that will give you a lot more detail about the individual country volume performance. Pricing in Europe, however, does remain challenging for us, particularly in Poland and Switzerland. I'm sure we'll talk about that later. Taking this all altogether, our heavyside business in Europe delivered nine-month sales and EBITDA growth of 5% and 4% respectively. A solid performance and good to see that the positive momentum from the first half is continuing.

Turning to Europe lightside, we saw robust demand across key products and end markets. Our construction accessories business which represents about 50% of the overall lightside sales, benefited from strong performance in the United Kingdom and, indeed, in France. In network access products, our UK and Irish businesses performed well, supported by good growth in the telecoms market. In Europe lightside, the nine-month sales were 7% ahead and EBITDA was 12% ahead.

In Europe distribution, the pro forma nine-month sales remain in line with the prior year, reflecting the mixed economic backdrop we're seeing in some of our key markets. Our businesses in the Netherlands continued to be driven by an improving residential market, but our shop business in Belgium was also positive. Switzerland, however, remains challenging, particularly on the multi-family side and while -- and the currency differential versus the euro also continues to attract imports in from some regions surrounding Switzerland as well.

However, Germany, as a whole, remains broadly stable. EBITDA for the period was 5% ahead of the prior year, as we continue to focus on cost and commercial excellence and that resulted in improved margins for Europe distribution. If I can ask you now to look at slide 5, where we start to look at how our Americas business has performed. And looking at those businesses, they contain to benefit from the positive underlying momentum, with the pace of growth clearly moderating, following a particularly strong first half, that benefited from favorable early season weather conditions. In our materials business, quarter 3 sales were in line with prior year, resulting in a nine month sales that were 6% ahead. And moderation in growth in quarter 3, was as a result of more demanding comparatives in quarter 3, at the first half of the year and as a result of some pull-forward work into the first half of this year. Despite the very strong year-to-date performance, our backlogs remain robust and are in line with prior year.

Our materials business also continues to deliver strong margin improvement with EBITDA 26% ahead of the prior year, for the first nine months. In Americas products, we've seen strong market conditions continue across all major end use segments and also both in new build and RMI. Our architectural products, precast and BuildingEnvelope businesses, all delivered positive volume and pricing gains in the first nine months of the year. CRL acquisitions of course, now are part of the BuildingEnvelope Group, is performing well and very much in line with our expectations. Overall for Americas products, sales for the first nine months were 12% ahead of prior year and EBITDA was 16% ahead of the same period in 2015.

In Americas distribution, that continues to perform strongly, despite some weather related pull-forward work into the first half. Demand for commercial and multifamily residential construction remains positive. We saw good growth in all regions, but probably the strongest in the south east and indeed out west. That was driven primarily by our interior products division. For Americas distribution, nine month sales were 8% ahead of prior year and EBITDA was 11% ahead.

So for the Americas as a whole, nine month performance sales were up by 8%, with strong operating leverage translating into EBITDA growth of 21%, so a very satisfactory performance here, by the Americas businesses. If I can ask you to turn now to please slide 6 and looking how our businesses in Asia did. Well, in the Philippines, we continued to benefit from good economic growth and strong domestic consumption and demand.

The cement market demand continues to grow and prices are ahead. In other markets in the region, well, our investments here are equity capped and their results don't flow through to our sales or EBITDA lines. In India we saw continued volume improvement against a favorable economic backdrop, but pricing remains challenging, due to overcapacity in the market. In our region, the southern part of India, we experienced good demand for the year to date, but pricing did slip back during the course of the year.

In the north east of China, where we have an associate investment, volumes and prices remained under pressure in a difficult market. So for the region as a whole and as I said earlier, a continuation of the first-half trends, delivering sales that were 4% ahead and EBITDA that was 7% ahead, for the nine month period, to the end of September. And so if I could ask you to turn to the last slide for the presentation this morning, slide 7, where we've summarized for you our EBITDA expectations for 2016. With the underlying performance continuing as expected, we're reiterating our EBITDA guidance, for the full-year 2016.

As you can see from the table, we expect to deliver EBITDA in excess of €1 billion for Europe. We expect to deliver EBITDA in excess of €1.9 billion for the Americas and EBITDA in excess of €100 million for Asia. That's going to result in an overall EBITDA outturn for the Group in excess of €3 billion. And I think even more impressive than the numbers themselves, is that these numbers have been delivered when we consider the significant currency headwinds we've experienced this year so far. So that concludes the introduction -- this morning's chat through. At this stage, I'm going to pass you back to the moderator, as we open our lines for questions and answers.

I should ask if you have a question, I will ask you to give your name and the name of the institution you represent, before your question.

Question-and-Answer Session

Operator

[Operator Instructions]. The first question is coming from Robert Gardiner.

Robert Gardiner

I have two, please. So first in Europe, I was just wondering, another strong volume performance in your heavyside division there, quite encouraging in terms of some of the numbers you've put in your appendix.

But pricing's still difficult and I was just wondering, you talked in detail about it at H1, if you update on the trend you're seeing through Q3, specifically you mentioned Poland and Switzerland. I'd be interested to get your thoughts there.

And likewise, in the U.S., I'd be interested to get your take on the outlook for highway and infrastructure spending. So, obviously, a lot going on there, between state and local initiatives, the FAST Act. And now the potential Trump stimulus on top. So just be interested to get your thoughts on that. Thanks.

Albert Manifold

Two questions there and I'll summarize both of them myself. With European heavyside, as you rightly say, Bob, yes, a good performance across most of our countries, actually, in terms of volume terms. But unfortunately, as you see on slide 9 there, it gives you the pricing breakdown there, of our presentation, pricing coming back across the main regions.

We've always said that volumes have to come back before pricing. And I think the continuation in the positive trends we've seen in volume are again a continuation of that. We saw it in the United States. It took two years to three years before pricing was factored back into the division. And I think we're seeing that process just starting now across Europe.

There are challenges across Europe. I have to say that our strategy, it's easily understood and in fact you can cross check across a lot of the other peers who talk about lines of pricing; in the markets that you talked about there, in Poland and Switzerland, we have had price improvements in those particular markets but we've suffered in volume terms. So we've taken short term pain because we wanted to show price leadership. And I give you one example there, the Polish market which, given that's where we're now in 2016, the price of cement in Poland is 25% below the price it was in 2007. And that's not sustainable, given the level of investment that it takes to build and run and continue to invest in cement plants in modern facilities.

So we have to get properly paid for our products. And we've taken the view in CRH that we have had to leave price in certain markets and we hope that in time that will become the norm across the businesses. And it's a question of being patient. And, as I've said to you, we've taken some short term pain and volume hits to maintain the pricing.

But broadly speaking, I think that the pricing environment is slowly improving across Europe and I think that the second half of the year shows some signs of improvement. And I expect that to continue into the first half of 2017.

With regards to the United States and the funding initiatives that are out there and in place, you're probably referring to -- you did refer to, in fact, President-elect Trump's comments. Look, the election was only nine days ago so the administration is not even in place. So let's leave that aside and see what happens because of it. I'd like to talk about what currently is in place.

On November 8, there were many significant matters put before the Americans to vote for. And they were not just Presidential and Congressional elections there were matters including -- in particular State funding initiatives for transportation and infrastructure spend. And in 22 states there were an increase of state initiatives put before them and 70% of those were passed. Now what does that mean for us?

Well up to last Tuesday, we had, with the FAST Act, we had an increase of Federal funding. And we also had prior announcement of State funding increases which meant that, overall, over the next five years, infrastructure spending in the United States was going to increase by 13%. That was over the previous five years. That was good and very positive. And we're planning for our business on that basis.

What happened last Tuesday was that in the 22 states that they voted, 70% of the votes were passed. And that meant that there was some very significant additional increase to state funding put in place. And then our major states, we estimate about $40 billion of additional funding has been committed over the next five years for state funding to go into infrastructure spend. And that will lift the overall expenditure -- combined expenditure, of the Federal Government and state by about $110 million which is a 21% increase over the previous five years.

And that's a very significant uplift. And we will be redoing our plans in terms of making sure that, as the biggest building materials business in North America and indeed in the United States, the biggest constructor of roads and supplier of materials for roads, that we have the -- our business is ready and primed to supply that money as it flows through over the next five years. So that for us was the really big news for last Tuesday actually, more than nothing else. So we think that's really significant in terms of our business going forward in North America.

Operator

The next question is coming from Gregor Kuglitsch from UBS.

Gregor Kuglitsch

A couple of questions. So the first one is just maybe on M&A and obviously in the context of the balance sheet, maybe you can give us a little bit of a sense now that your leverage is expected to be below 2 times, what you're thinking there? What the pipeline is like? Whether you have bigger chunks within there or just maybe give us some color maybe on a 12-month view.

And then the second question is on energy cost. Can you give us your best sense where we're heading right now as we go into next year? What kind of inflation should we be thinking about? And to what extent you're confident of being able to price those increases on to your end customers? Thank you.

Albert Manifold

Okay. Maybe what I'll do, Gregor, is, I'll pass it on to Senan. I'll deal with the energy cost going into next year. I'll let Senan talk indeed about the leverage we have and where we're going. And Maeve might just have a chat about the pipeline and the M&A and how we see the markets there.

Our view on energy next year is actually, I think we're factoring in plus or minus $50 oil. And that's factored into our equation going forward. The big move in the course of this year was not just on oil, it was also on coal and on petcoke And we're factoring quite significant increases in coal and in petcoke for next year.

But again we cover forward quite a bit, as we've often said before. So we tend to cover forward about half our needs on a rolling six to nine-month basis. So that's more a slow evolution, as such and that's even more on the importance of getting cement price increases.

So, as I said to you, we expect about $50 oil, so we're just, broadly speaking, slightly up on this year and coal and petcoke to be slightly up on this year. But again we feel we'll be able to cope with that and maintain our margins and hopefully get some improvement as we go through 2017 in doing that. With regard to leverage, Senon, you might just have --

Senan Murphy

Yes, I'd like to take that. In terms yearend balance sheet and positions, very similar to what we just said at the interims in the sense that, obviously, we continue to manage our balance sheet very effectively. Working hard on our CapEx on our working capital, obviously you get a guidance from us in terms of where you expect our EBITDA to be for the end of the year, in excessive €3 billion and we're comfortable at this stage that our net debt by the end of the year will be below €6 billion which then sets us up to have a relationship between net debt and EBITDA where our ratio at the end of the year is below €2 billion. So then with that capacity, then that obviously allows me to hand back to Maeve and you want to talk about, maybe, just what some of the M&A opportunities are, Maeve.

Maeve Carton

Thanks, Senan. Given that level of leverage at the end of this year and the strong cash performance in 2016 and our focus on it, we estimate that our capacity to spend on acquisitions over the next 12 to 18 months would be somewhere in the order of €1.5 billion to €2 billion. That's not a targeted to spend. As always we don't set ourselves targets.

Everything we do in relation to M&A is focused on value creation for CRH. We do have a strong pipeline, so while the level of spend that we've reported for 2016, as you've seen from the announcement, is relatively low at €172 million and that is a reflection of our focus this year on getting our net debt number down.

We still have -- there are plenty of opportunities to look at. Our geographic and product footprints gives us plenty of platforms on which to look at acquisitions. And all we can say at the moment is the pipeline looks good. We have opportunities. But our focus will remain on creating value for CRH.

Albert Manifold

I think I just should add as well there, Gregor, is that we have the -- as Maeve said, there's a lot of deals out there at the moment; that's exactly where you want to be because you can be very selective in that position, not just picking -- that's returns but also ones that fit your business better. So it's good to see we have a choice, it's a buyer's market and as we return to the equity gain in 2017 I think that'll be positive for us.

Operator

The next question is coming from Robert Muir from Berenberg.

Robert Muir

Just two questions from me. Firstly, just in terms of non-U.S. -- in U.S. non-residential, sorry; could you give us a bit of color on what segments office, residential -- office, commercial, etc., that are driving growth and if there's any regional color on the demand there and anything on the outlook? Can you give us a view?

And then in Poland, I guess given the potential for structural funding, the overall trend, I know it's been going all year in Poland volume-wise, a bit surprising, what's your take on the reasons for this and do you see a change in the near future, maybe what needs to happen? Thanks.

Albert Manifold

There are two questions there. Just on U.S. non-res; really what's been driving it during the course of this year, I'd put it down to two main areas, I think it was previous to this year, they've been driven mainly by office space and warehousing. In the United States, this year I think the big movers have been in the areas of lodging, hotels, [indiscernible] and retail; that's really the build out, that's where the big drive has been and some industrial as well. And it's good to see that the ABI is back above 50 again. It's been wallowing around -- it dropped a couple earlier this year for a couple of months, but it's back above again.

The regions where we're strongest are non-res. That really hasn't changed, that's the smile states. You can take it from the north, from Virginia, all the way down across the south all the way up the north east, north west. And I have to say that I think the outlook for that business remains similar to where we're at this moment in time [indiscernible].

I think the initiatives that have continued to drive that is obviously -- we look at the U.S. at full employment, but very significant job creation numbers. Every month they report figures for labor. I think this year we're plus 2 million new jobs and that's 2 million new jobs people have got to sit in offices, work in factories, work in warehouses, hotels, retail and that provides a great stimulus to non-residential construction. That looks to continue going forward.

In terms of Poland and the spend in Poland there in terms of the European funding in terms of what happens to roll program there. Just to remind people in terms of what the actual numbers are; there is a program in place from 2014 to 2023 to build roads and infrastructure out in Poland and there's effectively -- about €47 billion is committed to that of which €11 billion comes from the European Union and a further €36 billion comes from the Polish state itself.

At this moment in time, to date, where we look at the end of this year, we think about €18 billion of that has been allocated or approved to particular projects. Now about €12 billion of that has actually been awarded and contracted out and there's about another €6 billion or €6 billion and a bit which is actually out for tender at this moment in time.

So, they've really moved about a-third of the way towards of contracting and out for tender, but only a small percentage of that has actually hit yet. And the real reason why it's been slow going s because of -- it's administration, it's the fact that these growth projects are very large and significant and it takes some time.

We've seen this roll across Europe and Eastern Europe, I saw it indeed in my own country here 20 years ago, whereby these significantly larger projects take a lot of time for people to get up to speed in terms -- and they've got to process these projects and price them and award them and build to the specification that is required.

And very often, they fall short. They fell short in the last tranche. I think they'll get better in this tranche. Whether they get to the whole €47 billion or not, I hope they do, let's see how they go. But that's the main thing, is this the cause of bottlenecks, in terms of [indiscernible] them, awarding them, planning them, building them and getting the result.

Operator

The next question is coming from Rajesh Patki from JPMorgan.

Rajesh Patki

I have two questions. Firstly, based on the nine-month EBITDA of €2.4 billion, the bottom end of the full-year guidance, implies a slight decline in Q4. Can you help us understanding how the comps for Q4 are compared to Q3? That would be very helpful. And secondly, I think the guidance in restructuring target was €100 million for the full year. How much of that is included in the reported €2.4 billion? Thanks.

Albert Manifold

Two questions there, one on the guidance or how does Q4 comp for 2016 compare against Q3, 2016 and also about the -- where we're with the restructuring costs for this current year. Senan, you might help us with those?

Senan Murphy

Yes. So year-to-date EBITDA is at €2.4 billion as we're reporting after nine months. And as you said, for the full year, we anticipate being in excess of €3 billion which means very simply that we're talking about a number of €600 million or above for the fourth quarter.

The comparisons to last year, obviously, get confusing as you add in the acquisition of LafargeHolcim, etc., but the equivalent, let's say, reported number for the fourth quarter of last year was about €550 million. That will include some one-off items, etc.

So broadly what we're saying is, I think, year on year, for the fourth quarter, from an earnings perspective, we'll be happy to be in the region of being flat to modestly ahead, in terms of where we get to in the fourth quarter.

In terms of the restructuring costs, at the half-year, we guided that we had spent €25 million. We obviously have €100 million indentures for the year, in terms of anticipating where we go. And at this stage, obviously, there's still a number of weeks to go before we get that number finalized, but we'd anticipate that we would be well within that envelope of €100 million for the year. And that is taken into account in arriving at our guidance of above €3 billion for the year.

Operator

The next question is coming from John Fraser-Andrews from HSBC.

John Fraser-Andrews

My two questions are around the U.S. and both with a theme that some of your competitors, Albert and some of the macro data in infrastructure and in residential where housing starts are slightly down in Q3 and some of your peers have reported some negative volume in infrastructure.

So my questions are firstly, in infrastructure, are there any regional trends to that? So some of the problems have been in Texas, in California; what have been your experiences there in the third quarter? And on the residential side, it seems that you're getting some good growth in your products business. Has that been well spread regionally and what's your outlook there?

Albert Manifold

Two questions, John, there and good morning to you, John. I would say to you that -- if I just take the infrastructure then, we're looking at quarter on quarter, these are small windows, so the longer term, let's look at the longer term and see whether the small windows can slightly distort things. I have to say there's no real change. The infrastructure spend remains fairly solid and robust.

There were some specific issues with regards to mix in the particular quarter which can help some or not help some and regions. And I'll just give you an example. The State of Texas, where a couple of our major competitors in the United States reported very disappointing figures, that wasn't because they're any worse than us or we're any better than them; that's just down to footprint.

Most of their businesses were down in the Gulf Coast, where they had some very, very wet weather and also there, a lot of the businesses are focusing around the Houston area which has suffered as a result of the slowdown in oil and the investment in non-residential and industrial construction there.

Our businesses are focused further north in around Dallas, Fort Worth, Austin which is very much focused on the educational market or the technology market, completing different dynamic up there in the State of Texas. So we're well ahead in Texas and they're behind in Texas.

As I say, that doesn't make us any better or them any worse, it's just footprint and that just gives the example within one state how different it can be.

So my overall comment to you is that the infrastructure spend is solid. I think probably the most significant fact I can give you is that, despite the very strong performance by our businesses in the first nine months of this year where you would expect it possibly to strip out some of the backlogs, the backlogs are flat with last year, in line with last year which is a very good position to be in because we're really finishing out work initiatives at a low level of backlogs for us at this time of the year, but the indicators are good and they're well spread.

Secondly, with regards to the residential markets and the multi -- what you talked about, I'd have to say it's a continuation of what we said in the first half of year; very much the smile states are the ones that are doing -- down south and out west are the ones we're showing the strongest growth and continue to show that.

I should say that, again, we're also seeing some good uplift in multifamily homes in the major metropolitan areas in the north and north east which is good to see as well, good solid strength there as well. So no slippage in that as well; that remains fairly solid and continuous growth.

And our products business, as you've rightly said, that's probably our best window into the residential homebuilding in the United States because some of our businesses there are 95% exposed to U.S. residential. We're very much plugged into developers and contractors and, of course, they're working six, eight, 12, 18 months ahead. So looking at what they're talking to us about and their demand levels going forward, it seems to be fairly solid for 2017 as well.

Operator

The next question is coming from Gerard Moore.

Gerard Moore

Two questions from me, please. Just in the U.S., could you give us an indication if you have already perhaps informed your customers of price increases for aggregates? I think some of your peers have been suggesting that they've done so. Just to give us an idea if you have and if so, what scale?

And then back in Europe, within the Europe products division, could you just give us a bit more color in terms of the level of growth rates that the different product categories have been achieving, be it year to date or within the quarter? Maybe if they're just above or below the average for the division. Thanks.

Albert Manifold

Thank you, Gerard, there are two questions there. With regards to price increases I, quite frankly, don't really want to get into discussion with our customers over the telephone line. It's too early to talk about price increases for 2017. Normally what we do is we do that in the first quarter of a particular year in the United States. So I can't cover what anybody else is saying and also we'll see what price increases are going to be in place for next year.

From our point of view we think that the volume environment is generally supportive of price increases and we'll talk about that in the New Year.

With regard to our products business, as I said at the early introduction, our construction accessories business which makes it look like 50% of our European lightside business is probably the main driver of the growth there, although network access products has also done very well.

I would say that the margin of that business has performed very well, prices have performed well and the volumes have done well. That is an engineered-type business whereby we're specifying and designing product solutions for our customers which we then roll out across our major markets.

And our major markets are the major European construction markets but we also have some strong export business as well. And the UK has done very well for us this year as indeed has Germany, France, Switzerland and Belgium on that particular business. And the growth rates we've seen there has been in the high single digit percentages which is good to see.

Also our network access products and this is supplying products effectively to, not only just to telecommunications market, as I said this morning, they also provide products where you're putting high-end value technology under the ground, so just switching systems, computerization, telecommunications systems underground.

And we provide either concrete or indeed other composite chambers to secure and protect this business. But as you can imagine, with the rollout of technology across our major markets, across Europe, again it's a high growth business which again has seen growth in the high single digits as well, so good to see both of those doing well.

Senan Murphy

Not just that, if you look at the slides that Albert showed earlier, you'll see under the lightside division which is really the products division, through nine months the top line growth of -- up 7% for the year to date and obviously bottom line 12%. So that's very much in line with the overall Group's performance, in terms of how it's doing and actually trending ahead of the heavyside business in Europe in terms of its performance.

Operator

The next question is coming from Arnaud Lehmann from Bank of America

Arnaud Lehmann

Two questions . Firstly, on your full-year guidance, you said above €3 billion. Can you give us a feel at this stage how much currency headwind you include in your guidance because obviously on the one hand you have the sterling but on the other hand maybe a small positive on the dollar? That's my first question.

My second question is on the UK, in the first half you were up 21% but I remember you had some, let's say, positive one-offs in there related to the volumes you sell to LafargeHolcim. At the end of the nine months you're back to plus 10% which would imply that's a decent slowdown in Q3. So could you give us a feel for where you see volumes; what are the underlying trends in volumes for the UK and where do you see that going forward?

Albert Manifold

Okay, two questions there. One the volumes you're referring to, of course, I suspect are the UK cement volumes and maybe I'll ask Maeve to deal with that one first and then I'll pass it over to Senan to talk about the currency headwind we've seen in our business..

Maeve Carton

Okay, thank you, Arnaud. As you were commenting, the 21% growth in the first half reflected some excess or significant volumes that were part of the transition arrangements with the LafargeHolcim business. So the underlying trends which we've experienced in the third quarter and really reflects much more the underlying demand in the market, would be in the low single digits, 3% or 4%, volume or growth rate.

Arnaud Lehmann

Okay.

Senan Murphy

And on the currency side, the currency headwinds that we referenced in that release is we're basically assuming for the full year at this point that the headwinds for the year will be between €80 million and €90 million.

And as you've pointed out, that is mostly in sterling, given that the average rate on sterling year on year at this point is about 15% difference, so sterling is 15% weaker than it was on average for last year. You referenced dollar as well. There's actually very little movement on dollar. The average exchange rate for us on dollar versus last year is almost [indiscernible]. So it's mostly sterling and then some other currencies, like Canadian dollar and Philippine peso which the majority is sterling and the quantity that we're assuming at this point is between £80 million and £90 million for the year.

Operator

The next question is coming from Will Jones from Redburn

Will Jones

Two from me. The first just around the winter-fill program in the U.S. because you're kicking off now, so can you give us any early thoughts about availability from the refineries, how much you expect to do over the winter and what the early pricing is looking like on that please?

And the second was just more qualitative update, if you can, around LafargeHolcim assets. I appreciate they're fully integrated now within the divisions but just any additional news that you can provide on that process and synergy potential would be great. Thank you.

Albert Manifold

Okay, maybe I'll take the first question on the width of the program and how we're doing and maybe Senan can just update you in terms of the LafargeHolcim assets we're doing and any synergy update. You're right, Will and good morning to you. We've just started our winter-fill program and it really runs -- we start it from October and run it pretty much to May. It's very much a standard practice with that, so it's very low level. So we'd have less than 10% of our annual winter-fill, would be in the tanks as of yesterday.

And we put probably somewhere in the region of between 820,000 tonnes and 830,000 tonnes into the tanks across the winter season. So only about 10% is in place. It's pretty much the same quantity as last year as of yesterday and pretty much at the same price or it hasn't changed much in terms of year on year, in terms of where we were this time last year.

So it's broadly in line with that. The only thing, of course, that the winter program does -- the only thing we do know for sure, as for the last 22 years that we've been doing this, is that the price of bitumen is always cheaper in the winter than it is generally in the summer season. And that's what's important to us, not exactly what we're buying it in year to year but the fact that it's cheaper and the bidding season will be based upon the current price going forward.

So in line with last year, in terms of volumes and also in terms of prices that are in the tank at this moment in time it's what we build during December, January and February as well.

Senan, you might update in terms of how LafargeHolcim's assets are performing and indeed update maybe on our synergies.

Senan Murphy

Okay. So LafargeHolcim asset's performing very well, at this stage fully integrated into our existing businesses and performing in line with expectation. And from a synergy perspective, what we had guided was that over a three-year period that we upped our synergy targets to €120 million, of which €49 million of that would fall due in the current year.

At the interims we pointed that we were tracking ahead this year, so we anticipate this year that the synergies delivered in the current year will be more like €59 million and that's dialed into our number. In terms of the overall performance of the LafargeHolcim assets, you will recall that we talked about those bunch of businesses contributing about €820 million-worth of EBITDA last year. That number steps up this year, even though actually those assets contribute to a large part of the currency headwinds we talked about earlier.

So, there's currency headwinds there but despite that, those businesses will still be ahead in terms of their EBITDA contribution in 2016 over 2015 which is very pleasing.

Operator

The next question is coming from Mike Betts from Jefferies.

Mike Betts

Two questions, if I may. Firstly, FX you talked about the 2016 impact. If exchange rates remain the same, what would be the impact in 2017, please? And then, secondly, on Q4, I think you talked about €550 million being the comparative. For the full year you made €2.2 billion and at the same stage last year [indiscernible] with €1.5 billion that would suggest €700 million being the comparative. I'm sure I'm wrong but where am I wrong? Thanks.

Albert Manifold

Well, Mike, you're rarely wrong and I don't want to say you're wrong but I think Senan might have adjusted the number. He'll tell you where it was. Maybe, Senan, if I pass both of those to you.

Senan Murphy

Yes, I'll take both of them, Mike. The €1.5 billion that was quoted this time last year was on what was described as continuing operations. So, that didn't include any contribution from the LafargeHolcim assets required. And, if you recall, those assets were required during the third quarter of last year.

So, actually, the €2.2 billion at the end of the year would have included the performance of the stope period for LafargeHolcim. The €1.5 billion at September was continuing operations which excluded that, so therefore the difference between the two is not a like-for-like comparison.

So, as I said, if you were to include the LafargeHolcim contributions for the third quarter of last year, the number would have been above €1.5 billion and the difference between that number and the year-end close with €2.2 billion was the €550 million.

So, that's just a little bit confusing, given that we've moved between, obviously, continuing operations, like for like and pro forma. To your FX question about impact from 2016 to 2017, if the exchange rates stay where they are today, the additional FX impact in 2017 would be neutral. So, obviously, as we look at 2016 today, we highlighted the impact of what's happened to currencies in their movements from 2015 to 2016 and by the nature of the question, obviously, if we stay where we're at exchange rate at this point in time, the impact would not be significant going to next year.

Operator

The next question is coming from Manish Beria from Societe Generale.

Manish Beria

Manish Beria, Societe Generale. So, I have two questions. The first question is, should we expect a better comparison in the fourth quarter in the U.S. versus the third quarter of 1% like-for-like revenue growth? And there continues to be a significant gap in price performance in U.S. aggregate. You are growing at 3% versus your peers at high single digit pricing growth. So should we expect this gap to close in future? So, this is my first question.

And the second question is ,everything seems to have become a bit expensive in the U.S. after the Trump win. Are we therefore to expect that you will cut down your M&A ambitions? Or to say, in other words, many M&As did not meet your value creation criteria.

Albert Manifold

Manish, you had two questions there. I'll just repeat them as the mic was a little bit weak. The first question is with regard to what are our quarter 4 expectations for the United States and for our businesses over there in terms of volume and performance. And the second question was that our price increases, during the course, of this year are less than some of our peers are reporting and what's the reason for that?

And the second question was regard to -- given the way things have moved, post the election in the United States, has M&A become more expensive, what are our ambitions there? Maybe what I'll do is I'll take the first one and maybe I'll hand the second one to Senan in terms of the M&A.

With regard to quarter 4, Manish, I want to remind everybody that, again, we talk with our business on a quarterly basis here, on these calls. We don't run our business on a quarterly basis but we run it through years. If you can recall, I'll take a step back to last quarter, quarter 4 last year, effectively we had no winter last year. We would normally finish our heavyside businesses which is our biggest business in CRH and certainly our biggest business in America, we would normally finish all work pretty much the week of Thanksgiving and a couple of weeks after that we'll be cleaning up, oiling the machines and settling down for the winter.

We continue to work in quarter 4 of 2015 up to Christmas week. So we've got an extra four to five weeks. So it's going to be very challenging for us to meet those comparables. In saying that, of course, we have factored in normal weather patterns into our expectation of our EBITDA guidance.

So the fact that we do meet them or don't meet them will be decided by the weather and nothing else. The volumes are the volumes; the demand level is the demand level. But we cannot lay asphalt, we cannot break rock if it's 20 degrees below outside.

So we'll see what the weather will decide ultimately whether the fact we meet the comparisons of last year, but it won't -- if we do, it won't say the business is better; if we don't, it won't say the business is worse. It's just the weather.

With regard to quarter 3 and the pricing this year to date, that goes back very much to what I said earlier, in terms of it's about footprint and mix. I don't know the mix of Martin or Vulcan in terms of the products that they're selling. I do know our mix. But I do know that where we compete against each other on a head-to-head basis in markets, actually our price increases and our volume performance is almost identical.

All three of us there, we're the market in most of the places that we work and operate and we pretty much are similar to each other; whether there are regional differences, regional different footprints or mixed footprints, you do get these variations. And that's all that that difference -- that's what that difference is explained by.

Now with regards to the overall M&A marketing in the U.S., Senan, in terms of ambitions and where pricing is at this moment in time --

Senan Murphy

Yes. What I'd say is, look, our approach to M&A hasn't changed as a result of the election. And at the end of the day, from an M&A point of view, as Albert said earlier, we're totally focused on driving value for shareholders in any M&A activity. That is helped by the fact that we do have a healthy pipeline of deals today. So it's not a case where the pipeline is weak and we're in a position where we're forced to pay above the odds or above value for deals.

So what I would say is, very focused still on creating shareholder value. We're not going to find ourselves in a position where we're overpaying for deals and so long as we have a healthy pipeline of deals, we have choice in terms of the deals that we get involved in or the deals that we do.

Albert Manifold

Thanks, Senan. Thank you. And with that, ladies and gentlemen, I'm going to have to bring the call to a close. We've run out of time.

I shall say to you that indeed if we haven't answered any of your questions or indeed there's any supplementary questions you have or any details you'd like further, please feel free to contact our Investor Relations department; Frank Heisterkamp and his team are always available to you to help you with any questions or queries you may have.

We ourselves will talk to you next on March 2 when we have our -- the results presentation for 2016 and we look forward to doing so there. So, thank you very much for your time this morning. Thank you.

Operator

Thank you, ladies and gentlemen. This concludes the CRH trading update November 2016.

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