USA: Martin Marietta 2Q16 gross profits up 23%

USA: Martin Marietta 2Q16 gross profits up 23%
Published: 03 August 2016


Martin Marietta Materials, one of the top five US aggregates producers, has announced a first half turnover 11.3 per cent ahead at US$1649.8m and EBITDA rose by 40.6 per cent to US$419.1m. The trading profit jumped by 67 per cent to US$271.5m and after a net interest charge that was 5.4 per cent higher at US$40.3m and other items, the pretax profit jumped by 90.3 per cent to US$240.3m and the net attributable profit advanced by 89.6 per cent to US$167m. Net debt at the end of June was 8.8 per cent higher at US$1750.7m to give a gearing level of 43.6 per cent compared 39.6 per cent a year earlier.

Ward Nye, Chairman, President and CEO of Martin Marietta, stated: "We are pleased to deliver top-line and bottom-line growth with record net sales, gross profit and net earnings in the [second] quarter. Net sales increased nearly eight per cent (12 per cent excluding net sales attributable to the California cement business divested in the third quarter 2015).

"Domestic job growth remains a strong catalyst for construction activity and, during the trailing-12 months ended June 2016, the United States added nearly two and one half million jobs. The southeastern United States' steady economic recovery is gaining momentum with North Carolina, Georgia and Florida all ranked in the top ten states nationally for employment growth. For the second quarter, these market conditions, among others, helped drive aggregates product line volume growth of 4.9 per cent in the Mid-America Group, primarily due to increased private construction activity across North Carolina and South Carolina. Demand in the Mid-America Group was constrained by heavy rainfall during the first two months of the quarter. In fact, for April and May, aggregate volume was down 1.3 per cent; however, volume growth of nearly 16 per cent in June more than offset the early quarter weather deficit. Volume growth for the Southeast Group was 1.9 per cent, benefitting from increasing public-sector demand in Georgia and Florida, while increases were partially impacted by a reduction in ballast shipments.

Aggregates
Aggregates production rose by 6.2 per cent to 68.24Mt (75.22Mst), while the average price received was 7.5 per cent higher at US$12.89/st. The mid-America area sold 29.95Mt, or 43.9 per cent of the total, a 12.8 per cent increase, while prices improved by 4.4 per cent. The southeastern region saw deliveries improve by 3.5 per cent to 8.97Mt and prices rose by 6.7 per cent. In the western region, which represented 42.5 per cent of the volume, shipments declined by 0.8 per cent to 29Mt, while recent additions produced 0.49Mt or 0.7 per cent of the total. For the full year, Martin Marietta Materials is looking for aggregates volumes for infrastructure investments to improve in mid to high single digits and by high single digits in the case of non-residential building, while growing in double digits in the case of housebuilding.

"Aggregate shipments in the West Group were hindered by extremely wet weather in Texas throughout the majority of the second quarter. As previously predicted by the National Oceanic and Atmospheric Administration, the El Niño effect, which began in the spring of 2015, concluded at the end of May 2016. In addition, the reduction of shale-related shipments compared with the prior-year quarter and lower ballast shipments due to decreased rail demand further impacted the West Group's second quarter results.

“While some construction activity was temporarily displaced, contractor backlogs reveal pent-up aggregate demand. Further, the Dallas-Fort Worth Metroplex continues to be one of the nation's fastest-growing areas, benefitting from strong population and employment trends."

Asphalt
The asphalt tonnage fell by 21.2 per cent to 0.77Mt and the price declined by 10.5 per cent while ready-mixed concrete deliveries increased by 24.5 per cent to 2.83Mm³. Cement shipments were affected by the sale of the business in California as a result of which the cement volume dropped by 25.2 per cent to 1.64Mt (1.81Mst) of which 69.7 per cent went to external customers. but the wet weather in Texas in the second quarter again delayed some shipments into the second half. The special products division, which produces mainly speciality chemicals and dolomitic lime, saw turnover off by 0.7 per cent to US$118.4m, but the trading profit did improve by nine per cent to US$39.8m.