Peru’s construction and cement companies likely benefited from rising domestic demand and strong economic growth in the first quarter, analysts say.
Peru’s robust growth has propelled cement and construction company shares to double digit gains on the Lima Stock Exchange so far this year.
Some observers, including President Alan Garcia, are forecasting growth in gross domestic product of some 8.0% this year, following an 8.0% rise in GDP last year.
"The construction sector grew around 10% in the first quarter of 2007, driven by a strong rhythm of investment in infrastructure, in particular on the part of the private sector," Scotiabank said in a report.
Scotiabank forecasts first-quarter net earnings for Peru’s largest cement producer, Cementos Lima SA (CEMLIMI1.VL) of $11.7 million, up from $9.6 million in the same quarter a year earlier. Scotiabank said it expects a full year net income of $49.4 million, an 18.2% rise on the year.
Brokerage Centura said that Cementos Lima’s net earnings would be $12.0 million in the first quarter and $61.8 million for the year.
"Continuous strengthening of domestic demand will sustain growth in the volume of cement sales," it said.
Banco de Credito, meanwhile, forecasts that Cementos Lima’s earnings will rise 24% in the first quarter to $11.9 million and will reach $48.2 million over the course of the year.
Cementos Lima’s share price has gained 26% so far this year to Wednesday on the Lima Stock Exchange.
Construction company Grana y Montero SA (GRAMONC1.VL) is also expected to have fared well over the quarter.
Banco de Credito forecasts that Grana y Montero will post a net income of $8.9 million in the quarter, up from $5.1 million in the first quarter of 2006. It estimates that the company’s net earnings will reach $42.6 million over the course of the year, a rise of 21%.
Centura said it expects Grana y Montero to report net earnings of $8.6 million in the first quarter and $38.9 million over the course of the year.
"Grana y Montero will continue to show encouraging financial results based on strengthening domestic demand," it said.
For its part, Scotiabank forecasts net earnings of $6.7 million for Grana y Montero in the first quarter and $43.2 million over the course of the year.
Grana y Montero has risen 67% so far this year to Wednesday on the Lima stock market.
Meanwhile, Banco de Credito is forecasting that heavy machinery distributor Ferreyros SAA (FERREYC1.VL) will post first quarter net earnings of $10 million, compared with $6.3 million in the same period last year.