Building materials increase producers profits

Building materials firms listed on the Stock Exchange again registered significant growth rates in the first half of this year, while the slowing down of apartment sales led to turnover stagnation on the construction segment.
Cumulated turnover generated by the top 6 listed producers of building materials in the first half rose by 35.8% and reached almost 230 million lei (62.5 million euros). Overall income derived by the same companies in the first six months increased by 24.2%.
Similarly, the cumulated turnover of 10 listed building firms in the same period advanced by just 2.3%, while their incomes remained unchanged from the level reached in the first half of 2007.
The building materials field in the first half of this year benefited from the high demand coming from builders, which led to a 30% price hike.
This pushed some listed companies to earmark larger sums for the investments they had initially planned. Many producers in this field in the past year announced major investments to boost production capacities. They say that once the new production capacities are installed, competition may tighten and profit margins go down, but this is viewed as normal in the light of the fact that there has been a major supply surplus on the market so far.
„I expect somewhat more moderate increases, of 5-10%, and not of 30-40% as we’ve registered so far,” said Ioan Crehul, general manager of Cemacon in Zalau (central Romania).
In the first half, the company boasted the fastest turnover growth, after the figure went up by 66.3% against the same time last year and reached 24.4 million lei while Cemacon’s income climbed 2.4 times, to 3.6 million lei.
Lafarge Agregate si Betoane, the biggest producer in this field listed on the Stock Exchange, saw its turnover go up by 38.9% in the first six months, to 75.4 million lei, amid a 64.3% higher income of 7.3 million.
Analysts believe the stagnating indicators at the level of the constructions sector were also registered amid the more unfavourable weather conditions of this year.
Some builders have recently said they also noticed a sales decline in the housing sector, after the boom of the past 2 years, amid the international liquidity crisis and stricter lending conditions.
The biggest listed constructions firm, Comnord in Bucharest, reported a 27% lower turnover in the first half, to 95.3 million lei, and 29% lower net income, of 9.9 million lei.
On the other hand, other smaller builders have posted even three-digit sales growth rates this year.
„People are now temporarily waiting to see the trend of the apartment prices, but I believe construction activities will be resumed,” said Marius Muresan, an analyst with STK Financial.

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