The construction sector in deep trouble - August 25, 2010
While the European equity markets are struggling. But the values related to the construction sector underperforming the broad market on Tuesday. In case, a warning from the Irish group CRH: the largest producer of asphalt in the United States said it expected eventually to a 10% drop in profits for the year 2010 due to the fragility of the U.S. economic recovery.
Obviously, the penalty was not built until the stock market: shares tumble 16% HRA on the square in Dublin. And in its wake, Saint-Gobain and Lafarge, respectively dropping 5.43% and 4.94% and position themselves behind the curve on the CAC 40. Bouygues sold him, 3.65%. In Switzerland, Holcim loose 2.3%, while the pan-European Stoxx 600 index sector yield 4.2%.
Tough competition
Myles Lee, the CEO of HRA, said that the performance of the U.S. economy are "not good", but anticipate relapse into recession. "The economic news from the United States are disappointing and below expectations. It now seems clear that the economic recovery there, even if it occurs, will not be as strong than expected, "he said on Irish TV channel RTE.
Its chief financial officer, Albert Manifold, said his side as the weakness of the commercial construction activity and delayed investments of state and local governments in the United States had generated sales below expectations July and August, usually two months porters.
In addition, pressure on margins is increasing, so that several competitors are trying to reduce their prices, "said HRC.
Commodity prices and budgetary discipline
Harry Sebag, an analyst at Saxo Bank, explains that "businesses have impacted their margins and cut prices to gain market share." Already weakened, companies are also facing the weaker euro and higher commodity prices, driven by demand from emerging countries, which darken the outlook for the sector. Fiscal rectitude who moved to Europe and hence lower investment in construction, does shoved a bit more nail.
For the construction specialist in Europe, Euroconstruct, the sector should not resume until 2012.Particularly affected by the gloomy atmosphere, Ireland, Spain, and Portugal.
In France, since the beginning of the year, Lafarge has won over 37% in stock, Saint-Gobain, 24%, French Cement declined 19%, Vinci, Bouygues 14% and 12%.
A monitor, tomorrow, Wednesday, sales of new homes in the United States, which fall in the afternoon. On Tuesday, the bad news on the front sales of existing homes of great concern.
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