May 7, 2011
Little financial news to cheer about
By George H. Reddin
The construction materials sector has not had much to cheer about over the last few years. Congress did pass a short-term extension to the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), the expired surface transportation bill, on March 4, 2011. However, the necessary extension has not solved what the nation and the industry need in the long term. The industry is working hard to encourage Congress to pass a six-year bill with adequate funding to meet infrastructure needs. The construction aggregates industry depends heavily on highway construction, and a new six-year bill would give the industry a needed boost, as it does not appear that the residential recovery will contribute in any meaningful way until 2012 or beyond.
Oldcastle Materials, Inc. acquired an asphalt plant and sand and gravel operation in Greenwood and Black Hawk, Miss., respectively, from J. J. Ferguson Sand & Gravel, Inc.
The Rogers Group, Inc. acquired two asphalt plants from Carolina Material Sales, Inc., located in Burnsville, Minn., and Hendersonville, Tenn. In a related transaction, Rogers Group acquired paving divisions of Moore & Son Site Contractors, Inc. in Mills River, N.C., and Young & McQueen Grading Co. Inc. in Burnsville, N.C.
Holcim reported a decrease in net profit of 19.6 percent to $1.3 billion, due to weaknesses in Europe and North America’s construction sectors, with sales falling 10.7 and 6.9 percent, respectively. However, Holcim issued a positive outlook for 2011, saying that demand in mature markets will recover and growth in emerging markets will continue.
CRH plc reported a decrease in pre-tax profits of 27 percent to approximately $598 million and a decrease in like-for-like sales of 7 percent. However, the company anticipates revenue growth for 2011 based on improving trends in the second half of 2010, as well as year-to-date results in 2011.
The story on mergers and acquisitions in the construction materials sector continues in its holding pattern. Until it sees relief from some combination of residential construction, highway funding, and improvement in the economy as a whole, the market can expect a continuation of the slow, but steady, pace of strategic bolt-on acquisitions.