Ladies and gentlemen, thank you for standing by, and welcome to the CRH plc Trading Update. During the call, all participants will be on a listen-only mode. There'll be a presentation followed by a question- and- answer session. If you wish to ask a question, you will need to press star one on your telephone keypad and wait for your name to be announced. I must advise you that the call is being recorded today, on Tuesday the 24th of November, 2020. I shall now hand over to your speaker for today, Albert Manifold, Chief Executive Officer. Please go ahead.
Good morning, everyone. Albert Manifold here, CRH Group Chief Executive. You're all very welcome to our conference call and webcast presentation, which accompanies the release of our trading update this morning. I'm joined on the call by our Group Finance Director, Senan Murphy; Frank Heisterkamp, Director of our Capital Markets & ESG; and Tom Holmes, Head of Investor Relations. Over the next 15 minutes or so, Senan and I will take you through some of the main points of this morning's announcement, highlighting the key drivers of our trading performance for the first nine months of the year, as well as providing you with an indication of our expectations for the year as a whole. Afterwards, we'll be available to take any questions you may have, and all told, we should be done in about 45 minutes.
Turning to slide one. Before we begin, I would like to take a moment to acknowledge that our strong financial performance is the result of the extraordinary effort and commitment of our teams on the ground right across the group, the underlying strength of our business model, and the decisive actions we have taken to adapt to the evolving demand environment across our markets. As we continue to navigate these challenging and uncertain times, the health and safety of our people remains our number one priority, and is a core focus for us in each and every day. With regards to our trading performance, I am pleased to report that the good delivery in the first half has continued into the third quarter. For the first nine months of the year, our business has delivered profit and margin improvements despite lower overall activity levels across our markets.
Group nine-month EBITDA of $3.4 billion, 2% ahead on a like-for-like basis, with a further 100 basis points improvement in our underlying margin, all delivered against a 3% decline in sales. Turning to slide two, notwithstanding the uncertainties that persist in relation to the impact of the COVID-19 pandemic across our markets going forward, I would like to update you on our thoughts regarding the overall market backdrop and the trading environment as we sit here today. In North America and Central and Eastern Europe, underlying construction demand remains resilient. While in Western Europe, activity levels have improved despite the continuing health crisis across our markets. Infrastructure and residential demand remains positive. While certain non-residential sectors, particularly office, retail, and hospitality, have continued to experience lower levels of activity.
Despite these lower overall activity levels and notwithstanding the relatively benign energy cost environment, good commercial practices and pricing discipline are continuing across our businesses. Turning now to our divisional trading performance, first to Americas Materials on slide three. During the third quarter, weather disruption in parts of the South and West of the United States. and a strong prior year comparison resulted in volume declines across all product areas. Despite these lower activity levels, disciplined commercial management across our businesses continues to underpin positive pricing momentum in aggregates, cement, and ready-mix concrete, while our asphalt businesses have delivered further margin expansion. Our strong focus on cost control helped us to deliver improved profitability across our business. Against a 4% decline in like-for-like sales for the first nine months of the year, our business delivered a 9% increase in EBITDA and a further improvement in margin.
Next to the performance of our Europe Materials business on slide four, where we delivered a significant improvement compared to our first half performance, reflecting the continued recovery of activity levels across a number of our key markets and strong cost management across our businesses. In the absence of nationwide restrictions on construction across much of Central and Eastern Europe, demand remained resilient, with our businesses in Switzerland, Germany, Poland, and Romania continuing to perform well. In Western Europe, activity levels have recovered to approximately 90% of normal, with improving trends in cement volumes across France and Ireland during the third quarter of the year. In the United Kingdom, activity levels are also recovering, albeit from a lower base, and today are operating at approximately 75% of normalized levels. Despite these lower levels of activity, I am pleased to see good pricing discipline continuing across our markets.
Overall, cement pricing in Europe is 3% ahead for the first nine months of the year, with improvements across all our major markets. Putting this all together, our overall third quarter like-for-like EBITDA was 2% ahead of the prior year period, representing good margin improvement of slightly lower sales. Turning to slide five on our Building Products Division, which experienced a continuation of the strong delivery we saw during the first half of the year. The performance of this business reflects its significant exposure to residential and non-residential markets and the contrasting trends we've seen in the year- to- date. Our Architectural Products business, for example, continued to benefit from strong residential repair and maintenance demand in both North America and Europe through the third quarter.
Our Infrastructure Products business continued to deliver a resilient performance for the first nine months of the year, despite pandemic-related restrictions impacting activity levels. Finally, our Building Envelope business, primarily exposed to U.S. non-residential construction, continued to be impacted by lower levels of activity in that particular market. Overall, nine-month like-for-like sales were 3% ahead, while EBITDA increased by 9%. A robust performance reflecting strong operating leverage through our continued focus on cost control and pricing discipline. At this point, I'd like to hand you over to Senan to take you through our cash performance and year-end balance sheet expectations.
Thanks, Albert. Good morning, everyone. On slide six, you can see the key components underpinning our expectations for our year-end net debt position. I'm pleased to say that despite the significant volatility our business has experienced over the course of the year so far, we expect the year-end with a very healthy balance sheet position as a result of our continued focus on financial discipline and strong cash generation. Let me briefly take you through some of the key components working left to right on the slide. We ended 2019 with net debt position of $7.5 billion and a net debt to EBITDA of 1.7x . We expect 2020 to be another year of strong cash generation, indeed strong cash conversion across the group, resulting in a significant reduction in our year-end net debt position.
In the year- to- date, we've generated over $260 million of proceeds from divestments and reinvested approximately $180 million on 14 value accretive bolt-on acquisitions across the group. That results in a net proceeds of over $80 million. Notwithstanding disciplined management of our capital expenditure over the course of the year, we expect to invest a total of $1 billion to support growth in our business in 2020. In addition, we've also returned approximately $1 billion to shareholders in the form of dividends and share buybacks earlier in the year. Taking all of this into account, we expect our net debt position to finish the year at close to $6 billion or approximately 1.4x net debt to EBITDA. A very strong result, and provides us with significant optionality for future value creation as visibility improves.
Thanks, Senan. Another strong cash performance, really highlighting the strength and resilience of our business model. As you say, providing us with significant optionality going forward. Now, before I turn to outlook, on slide seven, I'd like to briefly update you on the progress we've made on our strategic objectives. During our interim results in August, we presented you with a slide that reflected on the strength of our business through the continued execution of our long-term strategy, enabling us to deliver even in challenging and uncertain times. We highlighted that through the active management of our portfolio in recent years, we've become a simpler and more focused business, and we said that we will continue to reshape and refine our portfolio to deliver superior growth, margins, returns, and cash generation for our shareholders.
As an example, in October, we reached an agreement to divest our cement business in Brazil for over $200 million, providing us with the opportunity to reallocate those proceeds into higher growth areas with more sustainable returns. We've also continued to adjust our asset base. In light of the changing environment and as a result of the combined economic effects of COVID-19 and the uncertainty surrounding Brexit, we expect to recognize a non-cash impairment charge of approximately $800 million in the fourth quarter of the year, primarily in relation to our operations in the United Kingdom and our associate investment in China. As you heard us say many times, we are relentlessly focused on continuous business improvements, a deeply embedded practice of making our businesses better through incremental improvement initiatives to structurally improve our margins, cash, and returns year- after- year.
Against a very challenging trading environment, we made further progress in this regard during the first nine months of the year, delivering an underlying margin improvement of 100 basis points. As Senan mentioned, we expect 2020 to be another year of strong cash generation and improved cash conversion for the group. Now before we turn it over to questions and answers, let me finish with a word on outlook on slide eight. In Americas Materials, we expect solid underlying demand to continue for the remainder of the year and for pricing to remain supportive despite lower energy costs across our business. In Europe Materials, we are expecting improved levels of activity despite the continuing health crisis across our markets.
In Building Products, we expect good demand in residential and repair, maintenance & i mprovement activity to continue for the remainder of the year, partially offset by a more mixed environment in non-residential construction. Taking all of this into account for the group as a whole, we expect full-year EBITDA to be in excess of $4.4 billion, ahead of the prior year on a like-for-like basis, representing further margin improvement and another year of progress for CRH. We look ahead to 2021, while the pace and shape of recovery across our markets remains uncertain, we are confident that the strength of our business leaves us well positioned for the challenges and opportunities that lie ahead. That concludes our presentation this morning, and we're now happy to take questions. May I ask that you please state your name and the institution that you represent before posing your questions.
In consideration of others on the line and to make the best use of the time we have available, may I ask you to please limit your questions to a maximum of two. I will now hand you back to the moderator to coordinate the question and answer session of our call.
Thank you very much. Ladies and gentlemen, if you wish to ask a question, please press star one on your telephone keypad and wait for your name to be announced. Again, that's star one if you have any questions. Our first for today is from Robert Gardiner from Davy. Please go ahead.
Good morning. Robert Gardiner from Davy here. Hope all well. Two for me. One, obviously, balance sheet is in fine shape, so how should we think about capital allocation in 2021? Do you see maybe a resumption of the buyback and the bolt-on strategy, or would you be prepared to step into bigger deals as visibility improves? Two, I'm just wondering if you could expand on your outlook comments, especially for the different end markets that you serve. I'm thinking in terms of the different businesses where you have a pipeline of backlogs, such as Americas Materials. Thanks.
Hi, Bob. Good morning. Two questions there. First question on capital allocation, which I'll ask Senan to talk about in a moment. The second one is just to give us, perhaps you asked me a bit more granularity about the outlook for the markets that we're servicing and what we're seeing in front of us. I'll take the second one, as I say, and then I'll pass over capital allocation to Senan. In our main markets in North America, specifically in the United States, I suppose, the three subsectors of the market that make up the construction market, obviously, infrastructure is the biggest area. Coming off the back of reasonably robust quarter three and continuing on through quarter four, actually, I have to say, we think that demand levels are pretty solid, actually.
We have clarity now with regards to the fact that we have a continuing resolution of the FAST Act, which gives the federal support for the funding going forward into 2021. In the election on November 3rd, there were about 344 different initiatives across the United States, across different states and localities to support increased state funding, of which about 95% of them are passed, committing another $14 billion of state funding to infrastructure going forward. Against that backdrop, and also from our own sense and our own network, talking to our customers, I think there are mechanisms currently being put in place, not only at a federal level that we've seen, but also at a state level to ensure that funding will be there to support activity levels going forward into 2021. I think we feel fairly okay about 2021.
It's going to continue on at the pace of growth that we've been seeing over the last couple of years. Residential markets have actually been quite robust. Hardly surprising that in quarter two, there was a slowdown, but it's rebounded well in quarter three. We're looking now on a rolling sort of an annualized basis. We're looking at housing completions at close to 1.5 million new homes in the United States. Significantly for that, we're seeing quite a shift in mix towards single-family homes. They're up almost 10% on last year as compared to multi-family homes. That, again, is a better mix for us because they're more materially intensive. The non-residential markets are clearly more mixed. The retail and commercial would make up about 50% of that, and it tends to have been hurt most in the North and the Northeast and the Midwest.
Stronger down South definitely stronger out West, stronger in areas such as education and medical, clearly, warehousing, to do with technology centers as well. A bit of a mixed bag. Overall down in non-res this year, I expect it to continue down, maybe perhaps at a slower pace for next year. Overall, I think the U.S. markets next year, broadly speaking, I think we'll continue to see flat to slightly ahead next year with regard to activity levels, we'll see where pricing goes on top of that. If I switch to Canada, by the way, off a particularly challenging quarter two, again, very significant impact of the COVID-19 pandemic, actually performing reasonably well in quarter three.
Again, if we return to more normalized environments, significant pent-up demands, particularly in and around Ontario, which is the core of our business in Canada. Coming across to Europe, without going through it in too much detail, broadly speaking, excuse me, a recovering situation across Europe. The core of our businesses are mainly in Central and Eastern Europe, and they've been relatively unaffected during the course of this year with the pandemic, keeping activity levels pretty much at normalized levels. We see that continuing forward in a bit of a patchwork quilt with many different countries in Central and Eastern Europe. Broadly speaking, continuing the progress that we saw in the first half of the year during quarter three and quarter four , we expect that to continue into next year.
Western Europe is recovering, getting back to normalized levels, and we think there will be specific support going through that next year. 2022, for instance, is the year of the French presidential elections. At the moment expect to see, as we always do, significant support for social initiatives and social housing in particular in France in 2021 to support our markets. Ireland doing well. Finland's fairly solid as well. U.K. probably the one area which is perhaps slower than anywhere else, and we'll talk about that later on, I'm sure. Recovering, but at a slower pace than everywhere else. Broadly speaking, solid and steady as we go, as far as we can see out, and I think we're looking forward to continued progress in 2021 going forward.
Bob, just in terms of capital allocation, as you point out, obviously, we intend to end 2020 with a very strong balance sheet. That gives us plenty of options as we go into 2021. I guess if we look at the usual checklist, starting with CapEx, obviously we'll continue to invest in our business. It will continue to be a disciplined approach. As you saw from us in 2020, we did reduce the CapEx spend in response to lower activity levels in some parts of our business. In other parts of our business where we had very strong activity levels, we continued to invest. We should expect to see a continuation of that approach from us into 2021. In terms of dividends, obviously we have 36 years of a very proud track record in terms of a stable or increasing dividend.
We continue to have a progressive approach to dividends, and you should expect to see a continuation of that as we look forward. I think in terms of the next lever, it is obviously M&A, looking at that. M&A remains a very key part, an important part of our growth strategy as we look forward. Typically, in any year, as you know, we would do somewhere between $500 million, $ 600 million and $1 billion of bolt-on deals. That number obviously is much lower in the current year, as we have pointed out to date. We have done about $ 200 million of bolt-on deals, so it is quite unusual, and I guess that is a reflection of the uncertain environment we have been operating in.
The pipeline looks good and looks healthy today as you look into 2021, as some of that uncertainty starts to recede, you should expect to see an uptick in activity levels in terms of allocation of capital towards the M&A side. I would say finally, looking at buybacks. Buybacks, we know, are an important part of our capital allocation strategy. We paused our current program back in March due to the unprecedented volatility we saw in the markets at that point in time. As I said, thankfully, the worst of that seems to be behind us at this point in time with regard to volatility. Given our strong balance sheet, obviously, we're very aware of the attraction of share buybacks to our shareholders, and obviously, we'll update you further on that during the first quarter of next year.
That's great. Thanks very much.
Thanks, Bob. Have a good day.
Our next question is from Gregor Kuglitsch from UBS. Please go ahead.
Hi. Good morning. Thanks for taking my questions. I'm going to approach the two questions similarly. Maybe if I can explore your outlook on pricing into next year. I guess we're quite late in the year, so perhaps some letters have gone out. If you can give us a sense what you think the likely price increases are and maybe put it into context for us what you're expecting to cost. In other words, do you think pricing could be net accretive, or is it going to be basically inflationary? Then coming back on M&A, can you just maybe explore a little bit more there? You talked about bolt-ons. I guess the question is what appetite, if any, is there for larger transactions? I think previously you kind of suggested you're less keen on very big transactions.
If you could just give us a sense what you're seeing in your pipeline and whether you're prepared to do something bigger. Thank you.
Hi, Gregor. Good morning to you. Hope you're well. Two questions there. First one on outlook on pricing and just a sense of where we are with regard to costs next year and give at least some sense of that early in the season. The second one with regard to M&A and just a bit more granularity about our appetite and where we are. With regards to pricing, look, we haven't started the pricing season yet. We're finishing up this year, so it gives a chance to do that. We've come off the back of what I would consider to be a solid pricing environment both in North America and Europe. Our costs go up, and our costs have gone up over the last number of years.
In particular, in Europe, we are playing catch up for quite a number of years. We will continue to play catch up for a number of years. I would expect across Europe to see progressive pricing continuing on during the course of 2021. Not because we need it. The assets we invest in are expensive assets. They need to be maintained. We need to get paid for the product that we sell. We sell a high-quality product that meets very tight specifications. We have to continue to invest time, people, and resources to do so. Of course, we've got increasing costs with labor and logistics and fuel costs as well. From my point of view, across Europe, I expect to see a further continuation of a positive pricing environment in 2021.
With regard to the United States, I think it's well embedded now at this stage for a number of years, that pricing is something that we should expect across our businesses, and I would expect it to continue there. In both markets, I would expect it to be in or at the same level as we saw in this current year, Gregor. With regard to costs and input costs, obviously our main input costs are labor and logistics and fuel costs. I would expect labor costs during the course of next year. Labor is still tight, quite frankly, even though unemployment has risen both in the European Union and indeed in the United States. Of course, it's specific labor we need. We're still quite tight on that, so I'd expect labor costs to be up maybe 2%-3%, depending on your specific regional focus.
Logistics costs and energy costs, I think they'll be broadly stable from where they are now at this point in time, looking at that. We would cover forward a lot of our costs on energy in particular, so we're always rolling forward. We have probably about 1/3 of our costs covered rolling as we go into next year. That's a thing we've done for quite some time. It's just part and parcel of what we do. That would be the pricing and cost environment as I would see it here today. Obviously, we'll be much better informed as we move into quarter one next year. With regard to M&A, I think Senan said it very well. With the pandemic that hit us in the first half of this year, clearly everybody just took a pause, and we did hit the pause button.
I've been in CRH for 20+ years now at this stage. I don't ever recall spending $ 180 million on M&A at November in any year, but this has been an extraordinary year. We deliberately held our hand. It's not because we lack appetite. It's not because we lack the capital. It's because we lacked the visibility. When you've got no visibility, it's very difficult to plot the way forward in terms of looking at forecasts. Also the sheer challenges of actually physically meeting people, what we've seen over several months in terms of the restrictions of travel, and that goes with that. However, in saying that, I have to say that certainly over the last two to three months, that has started to ease somewhat in terms of travel within Europe continent, Europe and within the United States made it easier.
I think the fact that the fog o f uncertainty is lifting somewhat in terms of what next year looks like. I've just given you our thoughts in terms of how we think next year's going to play out, and that's just not a CRH view, that's an industry view. With that in mind, we can start to see a bit greater clarity where opportunities may abound. We have capital. As Senan has said, M&A has been a significant part of the value creation story for CRH going forward.
We want to do M&A. We want to do disciplined M&A, and I think we would expect to see a progressive increase in our activity levels there during the course of the next couple of quarters. I don't think we're going to hockey stick up from where we are now at the moment, but I would expect it to progressively improve as we return to that particular game.
With regard to large M&A, there's nothing specifically planned with regard to large M&A. If we take a progressive, careful approach, as you know CRH will do, it's highly unlikely we're going to be out and doing some multi-billion deal tomorrow. At the same time, we keep our eyes and ears sharpened and open for value opportunities, and you would have seen that in the past. Just as Ash Grove came along, that was a $3.5 billion deal. It was a big deal, but it was a very fine deal, and it was a good deal for CRH. It was a good deal for Ash Grove, and I think we always keep our eyes and ears open for that. Our industry is very fragmented, both in Europe and in the United States.
As you would well know, there are a number of deals of a billion-dollar- plus that people haven't even heard of. Private businesses making $ 100 million-$ 150 million a year every year, and all of a sudden there are succession issues, or there are issues with regard to expansion, or they want to move other businesses on. It's our job, it's part of what we do, is keeping in touch with these people. This is our industry. This is our job. We keep a very careful eye on those. I wouldn't rule out anything extraordinarily large. I wouldn't say there's anything probably in the coming quarters, quite frankly. I think we'll slowly build up back from where we are at the moment.
We always keep an eye on value, and we know that if we do execute disciplined M&A, that usually ends up delivering value for our shareholders, and that's what we're here for.
Thank you.
Thanks, Gregor. Have a good day.
You, too. Thank you.
Our next question is from the line of Paul Roger from Exane. Please go ahead.
Good morning, guys. Hope everyone's well. Just two questions then. Going back to the CapEx point. Senan, you've obviously given guidance for this year. You mentioned a bit about next year as well. Some of your competitors have talked about the need to start hiking sustainability investment, potentially on things like carbon capture, but just general CO2 reduction. Is that a view you share? Maybe also if you can give us some indication of how much of that $1 billion CapEx is going into reducing CO2 this year? Then the second question, also on CO2. Clearly, a few of your large cap peers have gone quite aggressive on targets for 2030. You're at $520 million for 2030. Any plans to revisit that? Then finally, also on sustainability. Are you thinking about tapping any green sources of finance?
I'll start with the CapEx, then Albert, you want to say a few words on sustainability targets? Paul, just in terms of the CapEx point, I think as you pointed out, first thing I would remind you of is that 85% of our business is not cement. Said another way, 15% of our business is cement. When you're comparing our CapEx numbers to some of our peers, you should bear that in mind. This year, obviously, our CapEx spend is $1 billion. It's down to about 75% of depreciation. As I said earlier, in some of that spend, we've obviously spent more than previous years, where we've had parts of our business, particularly on the repair and maintenance side, some of our products businesses, where we've actually expanded our capacity to be able to cope with growing activity this year.
In a lot of other areas, we've obviously cut back. When I look at the sustainability spend, the sustainability spend is embedded within that number. As you look to 2021 and beyond, there's a portion that is related to obviously driving our sustainability agenda. I would say it's an affordable part of that, as opposed to calling out a specific number. I would expect that when you go into 2021, that as you see activity levels improving again, the CapEx spend would increase across parts of our business that need it. I think that's probably what I would say, really, about it. In terms of ESG, Albert, you want to add something there?
With regard to the ESG, I would say, first of all, I think, Paul, I know where your question's coming from, because a lot of our peers that you're talking to are 90%+ cement players. As Senan has said to you, concrete, aggregates, asphalt, building solutions, concrete products, Infrastructure Products, they make up 85% of our revenues. Cement is only 15% of what we do. Uniquely amongst that as well, almost all our cement is in the developed world. We have been operating and manufacturing to the most stringent standards that have been around the world for the last decade as such. As Senan has said, most of our targets are within the CapEx numbers that are there. Actually, in terms of improving CO2 targets, most of the time, actually, the work is done within the process itself.
It's changing process technology rather than buying in new equipment. If it was as easy to buy new equipment, we'd all do it. It's actually changing process technology, which is to do with the chemistry of the raw materials, homogenizing the raw materials, types of fuels that you use, all of those things, types of cement that you produce, and indeed the type of cement you use and the type of concrete. It's all interlinked, and it's all circular. It's more to do with how you work rather than what you spend. That's the first thing. Except in some businesses, particularly in the emerging markets, where you haven't had those standards embedded in your business.
You will find those of our peers who have greater exposure to developing markets have not had those standards embedded in their business for the last 10 years, and hence they've got to spend to do that. We don't have that situation. Also, I'd have to say that within the targets you talk about, people move these targets around the place. We're not ones who bring targets out every three months. If you compare apples- to- apples, Paul, none of us are smarter than anybody else. We all went to the same universities. We all have the same engineers. Broadly speaking, all the targets are in line for the industry to 2030. Within CRH, what we do actually, we give targets to 2025, and we're very happy that our targets are absolutely at the very leading edge of what our industry is doing.
Everybody's working very hard on this whole area. With regards to the broader issue at hand, how important it is to us, I'd have to say, that when I look at CRH, what's not really fully understood, of course, is that we are the largest recycler of building materials in North America. We're the largest producer of concrete in the world, and that is the world's most sustainable product. A lot of people focus on cement, but we're not a cement company actually. We're a concrete and aggregate and asphalt company. We happen to have cement as well. Concrete is the most sustainable building material in the world in terms of durability, energy efficiency, strength, safety. It absorbs CO2. It's 100% recyclable, and again, is an enabler of the ability of the infrastructure that we need to build the world that we live in.
It's an indispensable part of our modern way of life. What we have to do is we've got to look at that and see if we can do that in a more sustainable way, which is exactly what we're doing. We're very proud of having strong ESG credentials. It's a very important part of what we do, and I think it's really about just making sure people understand where CRH are as compared to our more cement-focused competitors.
Just Paul, you had a question about green finance there at the end. Look, it's something we'll continue to evaluate, but let's look at CRH's position. We issued bonds earlier this year at very attractive rates. Obviously investment-grade rating. There's plenty of appetite for our paper in the market. It's not something that we've obviously considered or had to consider at this point in time to date, but obviously, we'll keep it under evaluation. I would say, balance sheet is in a very healthy place. Raising debt at this point in time obviously is not a significant priority given our healthy cash position. Obviously, the term of our outstanding debt looks very healthy when you look at it, there's no refinancing that's imminent either.
It's something we'll keep on the radar, but bear in mind that our existing funding capability is already in quite an attractive place.
Yeah. That's great. Thank you.
Thanks, Paul. Have a good day.
Our next question is from the line of Arnaud Lehmann from Bank of America. Please go ahead.
Thank you very much. Good morning, Albert. Good morning, Senan. If I could, for my first question, just come back on your Q3 trading update and the, - 7% like-for-like sales for Americas Materials. Could you please confirm whether this is mostly reflecting the base effect, maybe also some hurricane activity rather than a meaningful downturn in the underlying market trend? That would be my first question, or maybe a little bit of both. Secondly, I guess congratulations to Senan for his planned retirement. Maybe you could give us a little bit of idea of the timing of the transition next year, that would be helpful. Thank you.
Yeah. Thanks, Arnaud. Two questions there. I'll take both of those. First of all, with regard to the quarter three and the reference you have to the -7% volume decline or top-line decline in Americas Materials, that really is a function of two things. First of all, we had a very strong quarter three in 2019. You may remember, Arnaud, it was a very difficult, wet quarter two in 2019, and it was a strong rebound. The actual quarter, the three-month period in 2019 was very strong. We had a strong comparison, number one. Number two, we had some very challenging weather in our footprint in North America for our materials business. It was very wet across the South, Texas and Florida. We lost more than a week in both of those big states for us.
It was also very wet up in the Northeast, New Jersey, Pennsylvania, Ohio. Again, very wet. We had some of those terrible fires up on the West Coast with the Pacific on the West Coast. It was those two factors more than anything else. The tough comparison, some difficult weather that hasn't been there in the past, but no underlying slip at all whatsoever. If I look what's happened in October, November, we've returned back to more normalized pace, as we would have seen for the nine months. With regards to Senan, well, you're congratulating. He's not gone yet. He's still sitting here opposite me, and he'll be sitting here opposite me for many months yet.
Look, as you would expect in any public company, succession planning for any senior executive is part and parcel of what we do as a management team and indeed, as a Board. With regards to Senan specifically, look, there's no immediate rush here. Senan is fully committed to his role here, and he's not going anywhere anytime soon. Our priority as the management team, and I know Senan's priority, is to finish out 2020 and to help complete our planning for 2021 in terms of how we're going to progress the business. That's our focus, and I know that's his focus right now. We have commenced a process, and we'll be considering both internal and external candidates. After, what you would expect with CRH, typical CRH, to be a smooth and carefully managed staged transition, exactly as you'd expect.
As soon as we have any update, we'll update the market when we know that. For the moment, steady she goes, focused on delivering this year and planning for next year.
Excellent. Thank you very much.
Thanks, Arnaud. Have a good day.
Our next question is from the line of David O'Brien from Goodbody. Please go ahead.
Good morning, guys. Good to hear from you. Thanks for taking my questions. Firstly, just the margin performance in Q3 has been very strong. I just wonder could you give us more color in terms of what has been the help from raw materials versus the actual self-help you've put in place yourselves during the period. Maybe you could update us on where do we exactly lie now in terms of the margin improvement plan that you outlined to the market a number of years ago, and what kind of advancement in an all things being equal environment in 2021 should we expect? If I could tag on one final one, just in terms of Europe, it's been a really impressive recovery, I think through Q3. Have we exited with like-for-likes turning into positive territory at this stage?
Hi, David. Two questions there, and two different questions there. Let me just address the issue with regard to cost and margin improvement and where we are on that particular journey. Look, I think it's been a very difficult year with regards to trying to manage our costs, not just with the volume declines, but the fact that the world just ended almost in mid-March and everything went off the edge of a cliff, and no one knew whether this was for three weeks, three months or three years. On top of that, we received a lot of inbound from various governments to hold our hand and not to be cutting jobs, which we didn't, and to hold back and hold on cost base, and we kept people on at our own cost through the businesses.
We kept people on during quarter two and quarter three in the hope that business will come back, and happily, business has come back and is starting to come back. I think having carried that cost base in the number year, to still deliver 100 basis points of improvements this year is a very good delivery because we've actually had to cover a lot of costs. There's been a big drag on cost this year that we wouldn't, if you were just being really tough about it, you wouldn't have carried, you would've made some decisions. We didn't do that. Happily we didn't because our teams who deliver across CRH week in, week out are the most valuable asset we actually have.
In terms of where we are going to deliver with that, actually quite frankly, we don't know because it's contingent upon the volume levels we're going to see during 2021. I know where we are now currently, and I'm happy that we'll continue to deliver good improvements in terms of cost takeout this year. It's more to the process and how we improve our businesses and how we look at our logistics and all of that. With regard to how much of it is self-help and how much of it is coming from raw materials costs, I'd say about 2/3 of it is self-help and 1/3 comes from energy, quite frankly. About 2/3 of it is what we're doing within the business ourselves, and that will endure into next year.
Next year will present new opportunities and new challenges, and rather than making proud boasts about where we'll deliver in 2021, I'd like to let that situation evolve and see where it is. Given what we have seen this year and given what we expect for next year, I answered a question at the very start from Bob from Davy. I was talking about the fact that I expect to see price expansion to continue both in North America and in the United States and in Canada. I expected a fairly flat environment with regard to energy and some inflation costs with regard to logistics and labor. That should be a scenario if we continue to work at the programs we have inside our business, that should lead to continued margin expansion.
I have said to you before, and I'll say it again, I think you should expect CRH to be delivering continued margin improvements year- after- year as we continue to reshape our businesses. By the way, it is not just down to how we run the businesses. I think you should just go back and reflect that it's down to how we manage the business and manage the portfolio, and this continuous process of the evolving portfolio, which we've been at since 2014. I think it's worthwhile reflecting. Since then, we've sold $9 billion worth of businesses at 11x EBITDA, and we've acquired $ 16 billion of businesses at 8x EBITDA. It's not just the numbers. It's the fact that we've become a narrower, deeper, more focused business, focused on our core capabilities, focused on the developed world.
That use of capital, that direction of capital, has allowed us drive operational performance and improve margins as much as the operational effort itself. The reshaping has been behind that, and of course, it's been behind the improvement in returns and has been behind the improvement in cash. That's a key part of what we do, and the benefits of that will endure and will continue. With regards to your question on Europe in terms of where we are, run rates and where it's going, I think broadly speaking, what we will see in 2021. I can't recall if you were referring to this exit. I see your comment was exiting this year, but I'll extend it on into next year.
My own view is that we'll see a continuation of a fairly solid and stable position with regard to Central and Eastern Europe. I think it's fairly okay there in terms of I know what the order books look like, I know what the funding looks like, and it looks to be fairly okay. I think we're going to see a continuation of improvement in Western Europe based on the fact that you know, like myself, David, [how are these doing here. I think we'll do okay. I think governments will push money into stimulus packages to lift the economies. Hopefully, science is going to save us all next year at some point during the course of the year. There are some specific factors with regard to elections that I referred to early on that should push government funding into infrastructure to support employment.
Broadly speaking, I expect Western Europe to continue progress during the course of 2021. The U.K., I think, will continue to lag. Quite frankly, our expectations are lower there. It's clear to me now at this stage, clear to all of us at this stage, that when we look at the U.K., the expectations we had for the U.K. a number of years ago are not coming through, and the long-term profitability of that business is below our expectations. Long-term activities are below what would have been our previous expectations for various reasons. With regard to Europe, that's the way I would see it. Eastern Europe, solid and steady. Western Europe continue to advance. U.K. continues to advance, but perhaps at a slower pace and in a more challenged macro environment.
That's great, Albert. Thanks very much. Take care.
Okay. I think we have time for one more caller now. I just see it just rolling up and now we're getting to 4:15 P.M. Let's take the last call, please.
Of course. Our last question for today is from Will Jones from Redburn. Please go ahead.
Thank you. Just a couple from me, please, if I could. Just coming back to the restructuring charge savings into play, please. Can you just confirm the $ 65 million that you've put up for the second half? Is that new versus your plan when you spoke to us back in August, and if so, what areas would be focused on? When we then take that forward and think about next year on the whole bucket of savings, I guess you've got some costs going back against you, like travel, maybe the absence of furlough, perhaps some new savings kicking in. How do you see the net of those factors, please, as we look into 2021? Then just perhaps you can explore a little bit more around the U.K. performance please, either market dynamics or company level.
I'm thinking particularly when you refer to market activity at 75% of norm at the moment, are you happy that the business is holding its market shares? Thank you.
Just in terms of the restructuring charge to begin with, Will, obviously what we highlighted in the announcement and we saw at the half year is we incurred $ 65 million that we called out as COVID related restructuring costs across the business, and we're guiding for a similar charge in the second half of the year, an incremental amount. Really what that relates to is obviously, restructuring opportunities across many parts of our business. You will expect and should expect to see benefits from that next year in the sense that obviously the restructuring costs, you wouldn't expect them to be incurred again. Also you start to see some benefits in terms of some permanent savings coming from that.
Particularly given the nature of some of the restructurings coming in the second half of this year, then the timing of savings on that will certainly run into 2022 rather than all be achieved in 2021. In terms of timing. I think the other thing to call out, just as we talk broadly about cost base, obviously, as Albert mentioned earlier on, there's been a significant amount of cost taken out of the business during 2020, and most of it in response to a significant decline in volume in the second quarter. I think the one big item I would call out is that during 2020, I think one of the big items that we've made progress on is to continue to variabilize, if that is a proper word, but to continue to variabilize our cost base.
As we go into 2021, I feel confident about the fact that the level of cost we have in the business will fairly reflect the activity levels, and we should be able to increase that, decrease that, in line with activity levels as they play out in the year ahead. I think that's probably the big feature in terms of the progress made in the past nine months.
Thanks. Will, just to comment, you threw the word furlough in there in terms of the absence of furlough next year. Well, the absence of furlough this year, just to be absolutely clear, CRH, whilst in the early stages of it, we did take up some of the furlough, all the furlough payments at all locations around the world were returned. We're not in receipt of any furlough now going forward. We decided that all the extra costs that we've had to cover, we will cover that ourselves. I think business has a role to play in society, and we felt that was the right thing to do. With regards to the United Kingdom in terms of performance, what that's there, as I said earlier, look, I think that the long-term profitability of the business in the U.K. is below what our previous expectations were.
Our previous expectations were formed when we effectively stepped up our involvement in the U.K. in 2016 when we acquired the Tarmac and the cement assets from the part of the prior [Holcim]. At that time, that was against a backdrop of what we were looking at, significant construction activity in the five to 10 years ahead of that. I think that a number of factors, clearly Brexit has been a very significant issue with regard to impacting confidence levels in the U.K., and that has impacted the construction significantly, and of course, COVID-19 as well. I think the combination of a number of factors there with regard to there's been a deterioration of the overall macro environment going forward. You know the commentaries are better than I do in terms of what that looks like. That impacts upon construction in a very significant way.
Your question was, do we feel that we're losing market share? Well, you know me very well. Market share is blood. You defend your market share. The thing about defending market share, it costs. Not only has the activity levels in the U.K. market below where it should have been, profitability is below where it should have been because we defend market share. When there's less activity to go around, and there's the same amount of supply in the market, well, the law of supply and demand kicks in at that stage. We and like everybody else, we've all been hurt significantly by the slowdown in the southeast, the non-residential market, the high-rise towers that were built in London, where high specified, high cost materials went into those businesses. Of course, that's slowed quite significantly, and that's reduced down the profitability of our business there.
Of course, infrastructure, well, in 2016, we hold our market share, but there was GBP 500 billion of infrastructure programs announced in 2016. As we sit here today, four years later, only about 1/3 of those are actually working and up and running. Of those that are actually up and running, a lot of them are behind or have been cut back. I don't feel we've lost market share. I just think that the ambition for the U.K. market has been reduced. That's not to say it's not an important market for us. We have got significant assets in the U.K. We've got very profitable business in the U.K. This is just a realization and a reflection of what the reality of activity levels are going forward. U.K. still remains an important market for us.
One we wish to focus on and concentrate on, and which we will continue to build a profitable business in going forward.
Great. Thank you.
Thanks, Will. Thanks. Good to talk to you. Well, look, ladies and gentlemen, that's all we have time for this morning. I want to thank you for your attention. I hope we've managed to answer some or all of your questions. As always, if you've any follow-up questions, please feel free to get in touch with our Investor Relations team during the course of the day or the remainder of the week. We look forward to talking to you again the 4th of March next year when we report our full year results for 2020. Thank you very much, and have a good day.
Thank you very much, sir. Ladies and gentlemen, that does conclude the call. Thank you all for joining. You may now disconnect.