Warmer Aggregates Climate

There is no doubt the harsh European weather in the first quarter of the year hit many companies hard. This, coupled with the weak market conditions, is seen in the first quarter figures from major companies in the aggregates, cement and concrete sectors.

Little can be done about the weather, but many company bosses, looking ahead to the next set of figures, felt things would be better in the second quarter of the year. They were correct, and there may now be a feeling that things are improving following some tough decisions a few years ago.

Indeed, 894 Breedon Aggregates, the UK’s largest independent aggregates business, reported EBITDA margin improved to 12.9% from 11.7% in June, 2012.

Looking ahead, its executive chairman Peter Tom, commented: “The general outlook for construction in the UK looks more positive than it did at this time last year. The decline in construction output appears to be levelling out and there is no doubt that a sustained recovery in the housing market is already underway.

“Fears about the economy sliding back into recession have receded and some confidence appears to be returning to the sector.”

Meanwhile, a survey by the 2897 Mineral Products Association (MPA) has also raised hopes, showing a significant improvement in sales of aggregates, ready-mixed concrete and asphalt in the second quarter.

“Following a poor first quarter, second quarter sales volumes increased by 14% for crushed rock aggregates; 9% for sand and gravel aggregates; 18% for ready-mixed concrete and 9% for asphalt, all compared with the same period of 2012,” says the report.

At 725 Lafarge, second quarter figures show a surge in profit (in the absence of a pre-tax impairment of €200 million recorded on Greek assets in 2012) although operating income and EBITDA were down on last year after a fall in sales and volumes, which were affected by the adverse weather conditions.

 “Taking into account first-half volumes, we foresee a cement demand growth in our markets of between 0 to 3% in 2013, which implies more positive trends in the second half,” says Bruno Lafont, chairman and CEO.

674 HeidelbergCement reported a strong operating performance compared with previous year despite adverse weather conditions in Europe and North America. Based on various financial assumptions, the managing board says it is continuing with the objective of further increasing revenue and operating income in 2013 and significantly improving profit before tax.

The group says that on the increase in the stake of Cement Australia, Midland Quarry Products and CJSC construction materials, it will probably exceed its CapEx target of €1.1 billion and reach a level of about €1.35 billion, although it will stick to the original target, and will continue with its disciplined investment policy.

“Considering the positive development in the second quarter, we confirm our earnings outlook for 2013,” says Dr Bernd Scheifele, chairman of the managing board.

While for companies some areas are performing better than others, the overall trends are encouraging, and the next sets of figures will give a further indication of how the recovery is progressing – or not.