Martin Marietta boosted by Building Materials

US-based Martin Marietta yesterday announced record consolidated net sales of US$791.7m in the first quarter of 2017, up 7.9 per cent on the same period of last year.

The company also said consolidated gross profit reached a high of US$147.1m in 1Q17 compared with US$145.3m a year earlier. EBITDA totalled US$147.7m in the first quarter of this year, it added.

Commenting on the performance, Ward Nye, chairman, president and CEO of Martin Marietta, stated: "Our strong first-quarter results mark a solid beginning to a very promising year. The vibrant construction environment for our infrastructure, non-residential and residential markets is encouraging."

The group noted that the performance was importantly driven by each product line in its Building Materials business generating solid top-line growth, with overall gains coming from aggregates and ready mixed concrete. Net sales for the Building Materials business were US$728.4m, an increase of eight per cent YoY, driven by pricing gains in aggregates, cement and ready-mixed concrete. The aggregates product line improvement of 5.3 per cent was led by a 10.3 per cent increase in the Southeast Group. The Mid-America Group and West Group reported a rise of 4.4 and 2.6 per cent, respectively. Ready-mixed concrete pricing increased by 3.3 per cent. The cement product line had renewed pricing growth of 2.5 per cent in advance of an announced US$8/t price increase, effective 1 April 2017.

Aggregates product line shipments were relatively flat compared with the record-breaking first quarter of 2016. However, the Southeast Group's volumes rose by 16.4 per cent. The Mid-America Group's shipments fell by 1.5 per cent, while the West Group's deliveries were down by 3.8 per cent, against a very strong 2016 comparison base. Including shipments from acquired businesses, ready-mixed concrete shipments rose by 15.1 per cent. Total cement shipments were down by 5.4 per cent, again versus a high prior-year comparison.

Encouraging outlook
On its outlook, Martin Marietta said it is encouraged by positive trends in the markets it serves and it is optimistic about the remainder of 2017 and beyond. It noted that public sector growth is expected to continue through the year as new monies flow into the system. FAST Act projects should accelerate supported by ongoing activity funded through the Transportation Infrastructure Finance and Innovation Act (TIFIA).

Non-residential construction is expected to modestly increase both in heavy industrial and commercial sectors. Additional energy-related economic activity, including follow-on public and private construction will be mixed. While US$47bn of new energy-related projects are scheduled to start in 2017 and 2018, the certainty and timing of commencement will affect non-residential growth, the company added.

Meanwhile, residential construction is expected to continue growing, particularly in key Martin Marietta markets, driven by high employment gains, historically low levels of construction activity over the previous years, low mortgage rates, higher lot development and higher multi-family rental rates.