CRH plc

The outlook is stable because we think the macroeconomic environment should progressively recover in the second part of 2020 and into 2021. CRH is well positioned to withstand the current difficult economy. In our base-case scenario, we expect funds from operations (FFO) to debt to temporarily drop to 28%-32% in 2020 and then recover to comfortably above 30% in 2021, which is commensurate with the 'BBB+' rating. We could lower the rating if CRH's FFO to debt declined below 30% with no prospects of a swift recovery. We believe this could happen if the effects of the coronavirus pandemic and the resulting global recession extend through all of 2020, with prolonged shutdowns of sites in both Europe and the U.S.

...S&P Global Ratings anticipates the building material industry will suffer in 2020 from the recession from the coronavirus pandemic, particularly in Europe and the U.S., then progressively recover in 2021. We assume that the cement and heavy-side building material industry will experience significant disruption in the first half of 2020, followed by a progressive recovery in the second part of the year and 2021. So far, several European countries have mandated temporary shutdowns. Outside Europe, some governments have taken similar actions, such as in several states in the U.S. Moreover, cement consumption is significantly declining, given that many construction projects are paused or slowed. We believe the measures adopted to contain COVID-19 have pushed the global economy into a severe recession, which will further reduce building materials consumption. For most companies that we rate, recession means a revenue decline of at least in the low double digits. However, S&P Global Ratings acknowledges...

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