Vulcan Materials Says Stimulus Funds To Buoy 2010 Demand
February 09 2010 - 9:26AM
Dow Jones News
Vulcan Materials Co. (VMC), a supplier of asphalt, cement and
other mainstays of heavy construction, said government economic
stimulus funding finally appears poised to spur an uptick in
demand.
The Birmingham, Ala., company made the forecast despite posting
fourth-quarter results that came in below Wall Street expectations,
on a 23% decline in shipments of construction aggregates.
"We expect 2010 to be the largest year of stimulus-related
highway demand for our products followed by another solid year in
2011," Chief Executive Don James said in a prepared statement.
The estimated $27.5 billion in stimulus money set aside for
highway construction has taken longer than expected to work its way
into actual contracts for many suppliers, who initially hoped to
see a bigger impact in 2009.
But Vulcan said contract awards in the states that it serves
climbed 13% in the fourth quarter, indicating the logjam is
clearing.
"We are encouraged by the increased award activity and are
optimistic that stimulus-related highway projects in Vulcan-served
states, after a slow start, are now moving forward," James
said.
Still, he noted that the overall construction sector remains
challenging, predicting Vulcan's 2010 aggregates volume will be
flat to up only 5%, compared to 2009.
The company said it expects residential construction to
increase, albeit from low levels, while privately funded
non-residential construction likely will experience "further
weakness."
But he said the company should get a boost from stimulus-related
highway spending through 2011. "By that time, we expect demand from
private construction activity to be improving, accelerating the
earnings leverage from our improved cost structure and disciplined
approach to pricing," he said.
For the fourth quarter, Vulcan reported a net loss of 11 cents a
share on $590 million in revenue, compared to a net loss of $1.93 a
share in the year-ago period on $799 million in revenue.
Analysts had been expecting the company to post a loss of 2
cents a share, excluding items, on $641 million in revenue.
-By Bob Sechler, Dow Jones Newswires; 512-394-0285;
bob.sechler@dowjones.com
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