Eagle Materials announces strong profit growth

Eagle Materials announces strong profit growth
Published: 26 January 2006

The US building materials producer Eagle Materials has announced 37.8 per cent increase in turnover to US$638.1m for the nine months to the end of December, with the trading profit advancing by 47.3 per cent to US$189.9m and the pre-tax profit by 46.5 per cent to US$174.8m.
Underlying turnover in the cement business rose by 35.6 per cent to US$215.8m and helped by taking full ownership of Illinois Cement Company, the overall profit from the cement activities advanced by 32.6 per cent to US$58.7m.  Cement deliveries were 19.0 per cent higher at 2.30Mt and average ex. works prices were 16.3 per cent higher at US$89.66 per tonne (US$81.34/short ton), with third quarter prices being ahead by a similar percentage to US$91.75 per tonne (US$83.24/short ton).  The company brought into effect price increases of between US$8 and US$10 per short ton from the beginning of January 2006 in its Wyoming, Utah, Colorado and Texas markets and cement price increases of between US$5 and US$10 per short ton have been announced for customers in Illinois, Nevada and California that are to come into effect during the early spring.
Capacity increases have been announced for the Laramie, Wyoming and Fernley, Nevada plants. Mountain Cement is to increase capacity at its Laramie works by around 60 per cent to 1.0Mt, while capacity at Nevada Cement’s Fernley plant is to double, and should then also reach 1.0Mt.  Both projects should be completed by the autumn of 2008 and the combined cost is put at around US$320m.  In addition to increasing capacity, this investment is also aimed at considerably reducing kiln fuel and electricity consumption per tonne at the two plants.  Taken together with the previously announced capacity increase the LaSalle, Illinois works, the group’s cement capacity will rise from a present 2.4Mt to 3.6Mt in the second half of 2008.
Turnover from aggregates and concrete rose by 26.9 per cent to US$68.2m and the trading profit jumped 44.1 per cent to US$8.0m.  Ready-mixed concrete deliveries rose by 15.8 per cent to 0.52m m³ and the average price was ahead by 13.2 per cent, though the third quarter on its own showed an 18.3 per cent advance to US$84.13 per cubic metre.  The shipment of aggregates was 11.4 per cent higher at 4.16Mt for the nine months, with the average price improving by 10.4%.  
The plasterboard operations recorded a 31.8 per cent increase in turnover to US$344.4m and a 73.0 per cent jump in trading profit to US$103.8m as volumes rose by 9.1 per cent and prices advanced by 23.6 per cent on the back of a tight supply situation and higher energy costs. A further price increase averaging US$20 per thousand square feet was introduced in mid-December.  A new plasterboard plant is to come on stream in South Carolina towards the end of next year, increasing group capacity by around 30 per cent.  Eagle Materials’ paperboard division, finally, recorded marginally lower sales and the profit dropped by 12.1 per cent to US$17.4m.