USA: Summit cement profits rise 45% on back of higher volumes and prices

USA: Summit cement profits rise 45% on back of higher volumes and prices
24 February 2017

In a trading statement for 2016, Summit Materials has announced that profits at its cement business rose by 45.1 per cent YoY, with volumes rising by 37 per cent and prices increasing by 7.5 per cent.

Summit’s cement segment produced revenues of US$250m in 2016, with profits reaching US$127m in the same period. The business produced 2.14Mt of cement over the year, of which 0.6Mt was produced in the 4Q16.

Summit’s profitability was improved by the rising price of cement. In 2015 its average selling price was US$111/t. For 2016 the equivalent figure was US$120/t, and by 4Q16 this had risen to US$121/t.

The company said that the increase in sales volume was a result of its acquisition of the Davenport cement plant in Iowa in addition to organic growth in its main markets along the Mississippi.

The wider business reported a 15.4 per cent increase in revenues and a 25.4 per cent increase in profit for 2016.

“Our cement business represents a clear catalyst for growth heading into 2017. Limited domestic production capacity and continued growth in US demand have combined to create opportunities for sustained growth in industry cement pricing. During the fourth quarter, our cement segment generated organic price and volume growth of 6.8 per cent and nearly one per cent, respectively.  Looking ahead to the remainder of 2017, we anticipate continued Adjusted EBITDA growth in our cement business, as supported by sustained growth in organic cement prices and sales volumes along the Mississippi River corridor,” said Summit Material’s CEO, Tom Hill.

“Following the recent election cycle, we have entered a new era of bipartisan support for funding that will help to properly maintain and modernise our nation’s aging transportation infrastructure. In the markets we serve, nearly 60 cents of every dollar spent by states on transportation infrastructure is federally funded.  Given that nearly 40 per cent of our net revenue is derived from public infrastructure work, Summit is well positioned to benefit from this opportunity.  With the support of appropriations from the FAST Act, we anticipate an acceleration in state-level infrastructure spending beginning in mid-to-late 2017.  Further, given ongoing advocacy by Congress and the current Administration for increased investment in state transportation infrastructure, we see numerous opportunities for multi-year growth in our public-facing businesses,” Mr Hill added.

Published under Cement News