Sources: Vulcan Materials Co., Birmingham, Ala.; Martin Marietta Materials, Raleigh, N.C.; CRH Plc, Dublin; CP staff
In investor guidance, the top three U.S. aggregate producers—each with varying levels of integrated concrete, cement, asphalt and road building businesses—report slight 2012 sales or earnings improvement over the prior year, plus 2013 market confidence underpinned by MAP-21 highway bill funding and residential building gains.
Vulcan Materials ended 2012 with revenues just shy of $2.57 billion and $3 million above the 2011 figure. Against flat aggregate sales of about $1.7 billion in both years, the company reported growth in concrete and cement shipments from 2011 to 2012, respectively: $375 million to $406 million and $72 million to $85 million.
“Earnings in each of our non-aggregates segments should improve versus the prior year. Concrete volumes and materials margin are improving as housing starts continue recovering in key states,” says Vulcan Chairman Don James of the 2013 outlook. “Cement earnings should improve due mostly to lower production costs. Full year earnings from these segments are expected to contribute significantly to earnings growth.”
Entering 2013, Vulcan projects year-over-year sales gains in aggregates for residential and nonresidential construction markets in the double-digit and single-digit ranges, respectively. Overall, James adds, “Our shipments in 2013 are expected to increase 1 to 5 percent with most growth to occur in the second half. Our outlook for another year of earnings growth is supported by improved pricing, aggressive cost control and some volume growth. We believe economic and construction-related fundamentals that drive demand for our products are continuing to improve from the historically low levels created by the economic downturn.”
Martin Marietta reports 2012 sales just over $2 billion, a little more than $300 million above 2011 figures, owing mostly to increased aggregate, ready mixed, asphalt and road building volume gained from the Front Range operations anchoring a late-2011 asset swap with Lafarge North America. That transaction was reflected in 2011 to 2012 increases Martin Marietta logged in sales of ready mixed, from $33 million $116 million; asphalt, $47 million to $80 million; and, road building services, $25 million to $136 million.
In 2013, Martin Marietta CEO Ward Nye notes, “We expect our vertically integrated businesses to generate between $350 million and $375 million of net sales and $20 million to $22 million of gross profit.” There will be significantly stronger new construction activity across the country for which the company is well positioned to capitalize, he adds.
“We are encouraged by positive trends in our business and markets, especially as MAP-21 and other programs are implemented,” says Nye. “For 2013, we currently expect shipments to the infrastructure end-use market to increase in the mid-single digits. We anticipate the nonresidential end-use market to increase in the high-single digits, [as] the Architectural Billings Index is reflecting the strongest growth at architecture firms since the end of 2007.
“Residential construction is experiencing a level of growth not seen since late 2005, with seasonally adjusted starts ahead of any period since 2008. We believe this trend in housing starts will continue and our residential end-use market will experience double-digit volume growth. Cumulatively, we anticipate heritage aggregates product line shipments will increase 4 percent to 6 percent.”
Oldcastle Materials, the number three U.S. aggregate producer behind Vulcan and Martin Marietta—but with far greater integrated-business volume—saw these trends from 2011 to 2012: stone, sand & gravel shipments flat; ready mixed volume up 2 percent due to acquisitions, but flat among existing operations; asphalt flat due to 2 percent drop in existing operations offsetting comparable gain logged from acquired plants; and, paving up 5 percent. Oldcastle Materials finished 2012 with sales of $4.97 billion; a $576 million gain from 2011 factors organic growth ($40 million), plus sales from acquired properties ($168 million) and exchanges ($368 million).
In 2012–2013 guidance for Europe and Americas businesses, Oldcastle Materials parent company CRH notes: “After a slower second quarter, United States GDP picked up strongly in the third quarter of 2012 … We believe the fundamentals are in place for continued positive momentum in the U.S. [and] expect our Americas operations to show progress in 2013. Assuming no major financial or energy market dislocations, we expect that ongoing improvements in our Americas businesses, combined with further profit improvement initiatives throughout our operations, will outweigh continuing trading pressures in our European segments.”