European Building Materials: Results read-through: RPM FQ4 26

Research evidence excerpt

European Building Materials: Results read-through: RPM FQ4 26

be less cyclical than the broader

construction/industrial markets, but still will likely see negative growth in a more severe

downturn. RPM's stock will likely continue to generally follow its earnings growth trend, If

earnings should decline substantially the stock would likely decline as well.

Saint Gobain:

Building material companies are by their nature exposed to national building cycles which are

influenced, in our view, by the level of interest rates, the rate of growth of GDP, employment

growth, population growth and the general condition of buildings (public and private).

Companies' sales are also sensitive to selling prices, which can vary as capacity and demand

levels fluctuate. Costs can be impacted by fuel costs, labour costs and other raw material

costs. International companies in our coverage list are sensitive to exchange rates, although

this is generally only through translation. The companies also face political risk, and can be

affected by weather. St Gobain specific risks include legacy asbestos liabilities. Our price

target is based on DCF.

Sika:

Sika's industry division is geared to the automotive and transportation industry. A significant

downturn in these industries would represent a risk for Sika. Furthermore, a general

downturn of the economy and the construction output figures could weigh on Sika's share

price. Sika's sales exposure to countries outside of Switzerland represents a currency risk, and

the company's raw material costs are exposed to oil price fluctuations. Sika’s Construction

division has a 40% exposure to infrastructure and commercial each. In case governments are

going to implement cost saving (austerity) programs as discussed, this could have a negative