CRH plc (CRH) Cash Flow Statement

The wide quarterly swings in OCF/NI, from -6.30 in 2024Q1 to 6.52 in 2025Q1, indicate that earnings quality is heavily influenced by working capital timing rather than accrual distortions. The 2026Q2 ratio of 0.76 suggests that net income overstates cash generation in that quarter, likely due to a large working capital outflow of $804M. Investors should focus on annualized conversion rather than quarterly noise, as the cumulative trend appears stable.

The sequential improvement in FCF from -16.5% to 4.5% margin reflects the seasonal ramp in construction activity, but the 2026Q2 FCF remains below the $2.1B generated in 2025Q4. This suggests that while the business is generating cash, the pace of reinvestment and working capital needs may be limiting FCF growth relative to the prior year. The gap between net income of $1.5B and FCF of $490M in 2026Q2 highlights the capital intensity of the business.

The consistent CapEx/Revenue ratio, ranging from 2.9% to 10.6% quarterly, reflects the heavy fixed-asset base required for quarry and manufacturing operations. The 2026Q2 CapEx of $639M is slightly above the prior-year quarter's $582.5M, suggesting continued expansion, likely in the Americas. Given the high D&A of $548M, a portion of CapEx is likely maintenance, but the growth in revenue suggests some is directed toward capacity expansion.

The volatility in working capital changes, with outflows exceeding $1B in several quarters, indicates that CRH's cash conversion is heavily influenced by the timing of receivables and payables on large infrastructure contracts. The 2026Q2 outflow of $804M, despite strong revenue, suggests that collections lag behind project milestones, which may pressure short-term liquidity. This pattern warrants monitoring, as sustained outflows could signal deteriorating payment terms or project delays.

The heavy acquisition spend, which has been a consistent feature across quarters, aligns with management's stated strategy of portfolio rotation and vertical integration. However, the $984M in 2026Q2 is the largest quarterly acquisition outlay in the data set, suggesting an acceleration in M&A activity. Combined with dividends and buybacks, total cash deployment exceeds operating cash flow of $1.1B, indicating reliance on balance sheet capacity or divestment proceeds to fund these activities.

The cumulative gap between net income and operating cash flow suggests that earnings have not been fully converted to cash, which may be due to working capital build-up or non-cash items beyond D&A. This divergence is typical for capital-intensive businesses but warrants scrutiny, as it may indicate aggressive revenue recognition or inefficient cash collection. Investors should monitor whether this gap narrows in future periods, as a widening could signal deteriorating earnings quality.