Building Materials

Emerging risks to price-cost equation

  • Sectors : Building Materials
  • Companies : Buzzi Unicem | LafargeHolcim | CRH | HeidelbergCement AG

Ratings

Ratings and price correct at time of issue

Company Rating Date Previous Rating Date Closing Price
Buzzi Unicem OUTPERFORM 04/04/16 Neutral 05/08/15 2110c
CRH OUTPERFORM 23/05/12 Neutral 12/01/12 3392c
HeidelbergCement AG NEUTRAL 04/02/20 Outperform 16/06/17 6128c
LafargeHolcim NEUTRAL 09/01/19 Underperform 17/11/15 4910chf

DAVY VIEW

Upcoming sector results have been well flagged, so we expect the companies to major on self-help, cash generation and sustainability. That combination still leaves one clear winner in CRH. The stock has done well and for good reason and we expect the outperformance to continue. That view is backed by solid developed end-markets where pricing remains robust. By contrast, emerging markets are increasingly mixed and we expect to see greater price volatility in oversupplied regions. This, combined with a less benign cost environment, the potential impact of the coronavirus and the tough H1 comparison base could lean on organic growth estimates at HeidelbergCement (HEI) and LafargeHolcim (LHN). We cut HEI to ‘Neutral’, seeing earnings risk and no strategic catalyst for outperformance.

Download full report with analyst certification and important disclosures

Feb 4 2020, 06:30 GMT

Download