Net revenues at Summit Materials cement business increased by 12.7% in 4Q16 49.3% for the full year, as the company benefitted from the acquisition of the Davenport business from Lafarge North American in 2015, as well as rising average selling prices and strong demand in its core markets along the Mississippi River.
The company posted quarterly revenues of US$70.7 million in 4Q16, with cement sales volumes up 0.6% and average selling prices up 6.8%. Quarterly earnings were 20.5% up on the previous year at US$35.6 million.
For the year, the cement business – including sales from the Davenport assets – reported revenues of US$264.6 million with sales volumes up 37%% and average sales prices up 7.5%. Earnings were up 51% at US$113 million, boosted by improved efficiencies and continued cost reductions.
“Our cement business represents a clear catalyst for growth heading into 2017,” said Tom Hill, Summit’s CEO in a statement. “Limited domestic production capacity and continued growth in US demand have combined to create opportunities for sustained growth in industry cement pricing.”
The Davenport assets included the 1.1 million t capacity Davenport cement plant in Iowa, as well as seven cement distribution terminals. Combined with Summit’s existing Hannibal plant in Missouri, the company has 2.45 million short t of cement capacity, as well as eight cement distribution terminals on the Mississippi River.
Looking ahead, Hill said the company expected further earnings improvement supported by “sustained growth in organic cement prices and sales volumes along the Mississippi River corridor”
Hill was also positive on recent political developments, noting that “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 where Summit operates, nearly 60% of transportation infrastructure spending is federally funded. With state-level infrastructure spending expected to increase on the back of the FAST Act, as well as potential support from the current Congress and Administration, “we see numerous opportunities for multi-year growth in our public facing businesses,” said Hill. Summit derives 40% of its net revenues from public infrastructure work.
Read the article online at: https://www.worldcement.com/the-americas/23022017/summits-cement-business-revenues-jump-in-2016/