Italcementi FY sales seen up 15 per cent on emerging market, mild weather

Italcementi FY sales seen up 15 per cent on emerging market, mild weather
Published: 01 February 2007

Italcementi SpA full-year sales, due on Friday, are seen rising by about 15 pct from 2005, underpinned by continued strong growth in emerging markets and by mild weather this winter that favoured construction activity, analysts said.  
 
Sales at the cement group should reach EUR5.727-5.775bn, compared with EUR4.999bna year earlier, according to analysts polled by AFX News.  
 
Emerging markets will be the main driver for the increase, while growth in its mature markets, Italy and the US – which together account for about 40 per cent of the group’s sales – is expected to slow, an analyst in Milan said.  
 
’Recent construction sector data in the US were not favourable, while in Italy the budget for infrastructure spending has been reduced. Growth will come substantially from emerging countries,’ he said.  
 
This analyst said he hopes that the company will provide a breakdown by countries in order to better assess the slowdown in Italy and the US.  
 
Another local analyst, however, was less downbeat and said that the mild weather in the US and Europe should have had a positive effect for sales.  
 
’It’s likely that results will benefit from the mild temperatures. No snow and the absence of frost facilitate construction activity,’ he said, adding that this weather effect should become more evident in the first quarter.  
 
This analyst has an ’add’ rating and EUR23 target on the ordinary shares.  
 
In a mid-Jan note on the cement sector, Merrill Lynch forecast sales of EUR5.762bn this year, and said that in the two following years Italcementi’s organic outlook appears ’unexciting’.  
 
’The group is the most exposed among its peers to Western Europe (63 per cent of 9-month sales), where we expect low growth in 2007. While Italy remains a competitive and fragmented market,’ it said.  
 
It also said that US organic growth will end in 2007.  
 
Merrill Lynch said Italcementi’s ordinary shares are fairly valued, while it has a ’buy’ recommendation with a 17.6 target on its saving shares.