April 1, 2011
Aggregate shipments show modest increases
By George H. Reddin
Merger and acquisition activity in the first quarter continues at a slow pace. The themes of balance sheet management, investment in emerging markets, and challenges in meeting the gap between buyer and seller price expectations continue to be visible in the construction materials sector. That said, earnings reports are starting to show modest increases in shipments with prices holding steady. These early signs of an improving market are good news for the mergers and acquisitions business and should lead to increased activity in the remainder of the year.
Tarmac and France’s Lafarge have announced that they will merge their cement, aggregates, ready-mixed concrete, and asphalt operations in the United Kingdom (U.K.) into a new construction materials firm. The joint venture will have its own board of directors and will be led by an independent chairperson and executive management teams drawn from both businesses. Lafarge employs 2,800 people in the U.K. and supplies approximately 40 percent of the cement market, while Tarmac, the U.K.’s largest quarrying company, employs 4,500 people and operates 118 quarries, 69 asphalt plants, and 180 ready-mixed concrete sites. Tarmac has been for sale since 2007 and still plans to exit U.K. construction materials and sell its interest in the joint venture.
Oldcastle Materials, Inc. announced that APAC-Texas Inc. acquired the assets of two independent sand and gravel companies operating in Austin, Texas. Oldcastle acquired three sand and gravel plants from Shumaker Enterprises, Inc., and one location from Austin Reclaimed Materials.
Cemex has swapped bonds due in 2020 for some of its outstanding perpetual debentures to cut its debt load, which will reduce its total liabilities by $41 million. Cemex must reduce debt by $2.3 billion this year to avoid a $200 million jump in its annual interest costs under the terms of its financing agreements.
Martin Marietta Materials, Inc. exceeded expectations with a fourth quarter profit of $14.8 million, compared to a loss of $3.2 million during the same period of the previous year. The fourth quarter results were impacted positively by a 14-percent increase in heritage aggregates shipment.
Vulcan Materials Company announced that it lost $47 million in the fourth quarter; however, trailing 12-month aggregates shipments have increased modestly since February of last year.