The aggregates industry saw signs of recovery during the first half of the year. And while the financial results from publicly traded producers are mixed,
The aggregates industry saw signs of recovery during the first half of the year. And while the financial results from publicly traded producers are mixed, there are reasons for guarded optimism for the second half.
Industry heavyweights Vulcan Materials and Martin Marietta Materials each sold more aggregate in Q2 than they had during the previous year's quarter. In fact, it marked the first time in four years that the companies have posted year-over-year increases in quarterly shipments.
Granite Construction reported sales were up in the quarter for its construction materials group. Heidelberg's aggregate shipments grew in the quarter, due in part to the recovering North American market. TXI's aggregate shipments for the quarter were flat.
The companies say they plan to maintain strict cost-control measures for the remainder of the year, but also expect modest growth to continue.
ìOur second-quarter volume growth is encouraging as we look ahead to the second half of 2010 and continuing recovery in demand,î said Vulcan Chairman and CEO Don James. ìThe flow of contract awards for highway construction, a leading indicator of future construction activity, has been improving since March of 2009, when stimulus-related funds became available to each state. During the first six months of 2010, total contract awards for highway construction in Vulcan-served states Ö increased 11% from the prior year. We expect approximately 75% of stimulus-related demand for our products to occur during 2010 and 2011. By the second half of 2011, we expect continued growth in the overall economy and an improving job market to begin driving an increase in private nonresidential construction activity.î
Martin Marietta President and CEO Ward Nye was also pleased with his company's results.
ìDuring the second quarter of 2010, we experienced an 11% increase in aggregates volume in the infrastructure market over the comparable second quarter of 2009,î Nye said. ìAs expected, many of our key states began spending funds from the American Recovery and Reinvestment Act in earnest during the quarter, and aggregates volumes consumed on stimulus projects increased 200% compared with the prior-year quarter. Even more notably, the infrastructure end-use market, excluding shipments to stimulus-funded projects, had volume growth of 6% due to state spending on delayed road maintenance projects.
ìFor the full year, we expect: infrastructure construction volume to be up 8% to 12%; nonresidential construction volume to decline 12% to 15%, improved from our earlier forecast; residential construction volume to be up 12% to 15%; and growth of 10% for our ChemRock/Rail products. Considering all these factors, we Ö expect aggregates volume growth of 4% to 6%, aggregates pricing to range from down 1% to down 3%.î
HeidelbergCement said it expects a positive business development in the Asia-Pacific and Africa-Mediterranean Basin areas. Based on a considerable increase in expenditure on road construction in North America, the recovery is expected to continue in the second half of the year. The extent and rate will depend on the spending behaviors of the U.S. states. Decrease in the unemployment rate remains a decisive factor in private residential construction.
ìThis quarter marks the first time in over two years that the sales volumes during the period were flat or exceeded those of the prior year period,î said TXI's CEO Mel Brekhus. ìShipments were up 4% and 6% in our cement and consumer products segments, while aggregate shipments were flat. However, pricing was down in all segments compared to the same period a year ago and also compared to our third quarter.î