Vulcan, Martin Marietta Look Forward

Vulcan Materials and Martin Marietta Materials, in their respective quarterly reports, looked ahead to the rest of the year.

“With the housing market gaining momentum, demand for Vulcan’s products, both aggregates as well as non-aggregates, is improving,” said Don James, chairman and CEO. “As such, the company expects earnings to improve in 2013 on the back of pricing growth, funding stability, aggressive cost control and volume increase. Private construction demand is expected to grow. Though the number of large highway and industrial projects are expected to grow with increased funding certainty from the new highway bill, the timing of these projects is difficult to predict.

The company expects aggregates shipments are expected to grow in the range of 1 to 5 percent in 2013. However, volume growth will be weighted more toward the second half of the year due to difficult weather comparisons in the year-ago quarter.

“We expect earnings to improve in all the three non-aggregates segments in 2013,” James said. “While concrete earnings are expected to gain from improving housing starts, cement earnings are expected to get a boost from lower production costs.”

Martin Marietta Materials President and CEO Ward Nye expects there to be significantly stronger new construction activity across the country this year.

“We are well positioned to benefit,” Nye said. “We are encouraged by various positive trends in our business and markets, especially as MAP-21 and other programs are implemented. For the full year, we currently expect shipments to the infrastructure end-use market to increase in the mid-single digits, driven by the impact of MAP-21, TIFIA and state-sponsored programs. We anticipate the nonresidential end-use market to increase in the high-single digits given that the Architecture Billings Index, or ABI, a leading economic indicator for nonresidential construction spending activity, is reflecting the strongest growth in billings 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,” Nye said. “We believe this trend in housing starts will continue and our residential end-use market will experience double-digit volume growth.

“We anticipate aggregates product line shipments will increase 4 to 6 percent,” Nye said. “As a reminder, we experienced moderate weather in the first five months of 2012, which allowed an earlier-than-normal start to the construction season in many of our markets. We experienced a different quarterly pattern of aggregates shipments and earnings in 2012 and comparisons with prior-year periods may continue to be affected in subsequent quarters of 2013. We currently expect that aggregates product line pricing will increase 2 to 4 percent. A variety of factors beyond our direct control may continue to exert pressure on our volumes, and our forecasted pricing increase is not expected to be uniform across the company.”

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