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Martin Marietta, Vulcan Look Ahead

Martin Marietta Materials and Vulcan Materials Co., in their second quarter reports, took a look ahead and predicted what the rest of 2012 might look like. Ward Nye, president and CEO of Martin Marietta Materials, is optimistic about his company’s prospects. “With the challenges of 2011 and the first half of 2012 behind us, we remain optimistic for our second half performance and our outlook for 2013,” he said. “The passage of MAP-21, which is essentially a final three-month continuing resolution through Sept. 30, 2012, followed by a two-year federal highway bill, provides us with a solid foundation for infrastructure construction. Since, as previously stated, we do not expect a notable volume impact from this legislation before 2013, we expect our infrastructure end-use market volume for the year to range from flat to down slightly.”

Nye anticipates double-digit volume growth in the company’s nonresidential end-use market, driven primarily by increased energy shipments, although some energy-sector activity will continue to be affected by natural gas prices, the timing of lease commitments for oil and natural gas companies, geographic transitions and weather conditions.

“We expect the rate of improvement in our residential end-use market to accelerate over the rate of improvement in 2011,” Nye said. “Our ChemRock/Rail shipments should range from flat to down slightly. As such, we anticipate heritage aggregates product line shipments for the full year to increase 4 to 5 percent and pricing to increase 2 to 4 percent. A variety of factors beyond our direct control may exert pressure on our volumes and our forecasted pricing increase is not expected to be uniform across the company. Heritage aggregates product line direct production costs per ton are expected to be flat compared with 2011, in spite of our expectation to reduce production as part of controlling our inventory levels.”

Vulcan Materials year-over-year EBITDA improvement to be realized from cost reduction initiatives underway across the organization, including additional savings from its Profit Enhancement Plan, as well as a year-over-year improvement in second half segment earnings in aggregates, concrete and asphalt. The company expects controllable costs in the second half of 2012 to decrease approximately $50 million from the prior year.

“Aggregates freight-adjusted pricing is expected to increase 1 to 3 percent in 2012,” said Don James, chairman and chief executive officer. “Aggregates demand should benefit from a recovery in private construction activity and stability in highway funding in our markets. As a result, same-store shipments are expected to increase 1 to 3 percent versus the prior year. Total aggregates shipments for the full year are expected to be flat to 2 percent higher as a result of the sale of Indiana operations in 2011. The uneven pace of growth in shipments through the first half of 2012 across our key markets make forecasting overall volume growth more difficult. The full year outlook assumes a more normal geographic mix of shipments in the second half of 2012.”

Unit costs for diesel fuel are expected to increase modestly from second half 2011 levels resulting in a full year increase of 1 to 5 percent from the prior year, according to James.