Martin Marietta's 2Q18 cement product revenues increased 14.4 per cent and gross profit by 40.6 per cent. Shipments and pricing improved 11.6 and 2.6 per cent, respectively, reflecting the strong underlying market conditions throughout Texas. These factors, coupled with increased production efficiencies, led to a product gross margin of 36.5 per cent, reported Martin Marietta.
Inclusive of acquired operations, aggregates product revenues increased 15.1 per cent for the quarter, reflecting volume growth of 11.3 per cent and pricing growth of 3.5 per cent. Heritage volume and pricing improved 3.4 pe rcent and 4.4 per cent, respectively.
Aggregate shipments for the Mid-America Group heritage operations increased 4.6 per cent, driven by several large public and private construction projects in North Carolina. These operations generated heritage pricing gains of 6.3 per cent, driven by continued price discipline. Shipments for the Southeast Group heritage operations increased 3.4 per cent, driven by strong construction activity in North Georgia. Weather and railroad inefficiencies hindered long-haul shipments from South Georgia to distribution yards in Florida, negatively affecting shipments and limited pricing growth to 1.5 per cent. West Group shipments improved by two per cent. Notably, all districts in the Southwest division posted volume growth. However, this growth was partially offset by reduced Colorado volumes resulting from project delays and lower ballast sales. West Group pricing improved 3.2 per cent, reflecting robust pricing in Colorado that was offset by product mix and a lower percentage of commercial rail-shipped volumes in Texas.
Ready-mixed concrete shipments increased 15 per cent, driven primarily by strong construction activity in Texas, particularly in the Dallas/Fort Worth market. Overall, second-quarter ready-mixed concrete prices decreased slightly, with lower energy-sector shipments and product mix in Texas offsetting the solid pricing gains in Dallas/Fort Worth and the nearly six per cent pricing growth in Colorado. Project delays contributed to the six per cent decrease in hot mixed asphalt shipments, while rising raw material costs allowed for favourable pricing during the quarter.
Ward Nye, chairman, president and CEO of Martin Marietta, stated, "Underlying product demand and customer backlogs remain strong across our markets, with notable growth in Texas, North Carolina, Georgia and Iowa. In addition, our cement operations benefitted from the combination of strong demand and a tight supply environment, resulting in double-digit volume growth and a 680-basis-point improvement in product gross margin for the quarter.
"We believe the United States is in the midst of a construction recovery that will continue through the remainder of 2018 and beyond. Consistent with our forecasts at the beginning of the year, we expect construction activity to accelerate during the second half of this year, with faster growth in our key geographies due to these regions' attractive economic drivers and population trends. We remain confident about Martin Marietta's near-and long-term growth trajectory and expect 2018 to be another record year, as evidenced by our decision to raise our 2018 EBITDA guidance. We expect the disciplined execution of our strategic plan will continue to create shareholder value as we elevate Martin Marietta from an aggregates industry leader to a globally recognised world-class organisation.”
