Vulcan Materials, Martin Marietta Forecast Gains From Stimulus
February 09 2010 - 12:40PM
Dow Jones News
Top producers of gravel, asphalt and other mainstays of heavy
construction said government stimulus spending should spur improved
demand this year, even as they reported disappointing
fourth-quarter results amid the tough economy.
"A lot of the stimulus work [on highways] that was slow getting
out of the box in key states" last year will buoy 2010 volumes,
Vulcan Materials Co. (VMC) Chief Executive Don James told analysts
on a post-earnings conference call.
In states such as Florida and California, "the vast majority of
their [stimulus-related] spending is in front of them," James
said.
Martin Marietta Materials Inc. (MLM) concurred, noting in a
prepared statement that many of its customers "began 2010 with a
project backlog that would not exist" without stimulus funding.
Among other stimulus programs, $27.5 billion was set aside for
highway projects. The money has taken longer than many suppliers
expected to work its way into actual contracts, but both Vulcan and
Martin Marietta indicated the logjam has broken.
But they predicted only small overall increases in aggregates
volume this year regardless. Residential construction is expected
to improve, albeit off a low base, but privately funded commercial
construction is forecast to remain weak.
Vulcan said it expects its aggregates volume to be flat to up 5%
in 2010, while Martin Marietta pegged its volume increase at 2% to
4%.
They reported fourth-quarter declines in aggregates volume of
23% and 24%, respectively.
Both said it will be critical for Congress to reauthorize the
federal highway bill, which expired last fall and has been
operating under a continuing resolution, and they voiced support
for a federal effort aimed at job creation.
Vulcan reported a net loss of 11 cents a share on $590 million
in revenue. Wall Street's consensus forecast called for a loss of 2
cents a share on $641 million in revenue.
Martin Marietta reported a loss of 7 cents a share on $374.7
million in revenue. Excluding items, the company said earnings came
in at 11 cents a share, but the figure still fell short of Wall
Street's forecast for earnings of 33 cents on $383 million in
revenue.
Shares of Martin Marietta were off about 6.2% in recent trading
at $74.67. Vulcan shares were off about 2.8% at $42.29.
James, of Vulcan Materials, said he expects stimulus spending to
help results through 2011.
"By that time, we expect demand from private construction
activity to be improving," he said.
-By Bob Sechler, Dow Jones Newswires; 512-394-0285;
bob.sechler@dowjones.com
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