Analysts at UBS maintain their neutral recommendation for the Spanish Cementos Portland but cut its target price to EUR14 from 17 earlier. This review is motivated by the austerity plan in the public infrastructure sector announced by the Government.
The estimate of EBITDA for the years 2010-12 has also been reduced by 11%, predicting a drop in cement consumption. And the broker, although expecting a recovery in international activity thanks to the dollar’s appreciation, is aware that the Spanish market still represents over 70% of Cementos Portland sales.
The investment bank appreciates the cost-cutting initiatives and the greater efficiency at the level of energy and manpower that have been realised. However, macro-economic circumstances do not help and it expects net debt / EBITDA for 2011 is placed at 5.5x.
Within the Spanish construction sector, OHL remains the favourite value for UBS, which retains its buy recommendation with a target price of EUR28.