Vulcan Materials Company, United States, today announced record net sales of US$749m and record net earnings of US$122m, or US$1.17 per diluted share in the third quarter. These amounts represent a 15 per cent increase in net sales and a 23 per cent increase in net earnings from the prior year’s levels. Earnings from continuing operations increased 39 per cent to US$128 million, or US$1.23 per diluted share. Discontinued operations - comprised of the Company’s former Chemicals business - reported a loss of US$6m, or US$0.06 per diluted share in the quarter.
Commenting on the third quarter results and fourth quarter outlook, Chairman and Chief Executive Officer Don James said, "Our Construction Materials business achieved the highest quarterly sales and earnings in its history. We are pleased with the underlying strength in our markets and the solid pricing gains realized for our products. Volume gains were realized despite the disruptive effects of five hurricanes in the quarter. Going forward, construction activity should continue to be robust."
The strong increase in sales resulted from sharply higher prices for all key products and a 3 per cent increase in aggregates shipments. Prices for aggregates in the quarter increased 9 per cent as compared to the same period in the prior year. Sales volume growth was limited somewhat by wet weather and the related disruptions in construction activity from the hurricanes. Higher prices for aggregates more than offset sharp increases in the cost of diesel fuel and higher spending for repairs, maintenance, parts and supplies necessary to improve recently acquired plants and to operate at record production levels. Diesel fuel price per gallon increased over 50 per cent from the prior year, reducing pretax earnings by approximately US$11m.
Sales for both asphalt and ready-mixed concrete were up sharply in the third quarter from the prior year due mostly to significantly higher prices. Price increases for both products offset higher costs for raw materials, including liquid asphalt and cement. Sales volumes for both products increased versus the prior year, driven by strong demand in California and Arizona and the addition of an asphalt business acquired in Arizona during the first quarter of this year.
According to Mr. James, "Overall demand remains strong and aggregates pricing gains achieved thus far in 2005 provide momentum as we move into 2006. Our challenge is to continue to achieve productivity improvements in order to meet increased demand and offset higher costs for energy and materials. Energy-related costs have become particularly acute since Hurricane Katrina in late August. For the fourth quarter, we expect diesel fuel costs to increase approximately US$13m from last year’s fourth quarter.
"Aggregates pricing and volumes are each up approximately 7 per cent year to date. We expect increases in both price and volume in the fourth quarter as compared to last year. Our outlook for demand in the fourth quarter is based on residential construction remaining at high levels and a continuation of the modest recovery underway in private nonresidential construction. The new multi-year highway bill passed by Congress and signed into law by the President enables states to move forward with significant new projects and sets the stage for steady growth in highway spending for the coming years.