Taiheiyo Cement Corp. may revive talks to acquire a ready-mix concrete maker in the United States for which negotiations broke down last month, the president of Taiheiyo’s international company said.
In an interview with Reuters, Keiji Tokuue also said the profit of its U.S. operations was about 10 percent below its forecast for the April-June quarter, hit by a weak housing market.
Taiheiyo, Japan’s largest cement maker, announced last month that it had failed to clinch a deal to buy a U.S.-based maker of ready mixed concrete. It did not name the company or say why the talks broke down.
"It’s not as if talks broke down because of a fight. If certain terms are right we would resume talks. We left things on friendly terms," Tokuue said, adding that it was also considering other acquisition targets.
Expanding in the U.S. is a key pillar of Taiheiyo’s growth strategy given little hope for growth in its mature home market of Japan. North America accounted for about one-third of its group operating profit in the business year that ended in March.
Tokuue said housing demand in the U.S. remained sluggish, partly due to problems with subprime mortgages -- those made to borrowers seen at higher risk of default.
He said industry-wide demand for cement in the U.S. could fall 2 to 3 percent this year.
"It seems like the correction in the housing market could last through the end of this year," Tokuue said. "Profit for the January-March quarter was a bit below our forecast, and the trend continued in April-June."
Taiheiyo does not give quarterly estimates, but it has predicted that its U.S. company will post a $275.9 million operating profit for calendar 2007, up 18 percent from 2006.