European Building Materials: Peace in the Middle East = cost relief and improved volumes outlook

研报英文原文证据摘录

European Building Materials: Peace in the Middle East = cost relief and improved volumes outlook

At this stage, while we are not expecting meaningful price deflation in building

materials, we believe that a ‘fade’ in the pricing momentum is possible through H2 i.e.

the mid-single digit price increases implemented through April-July could end up around

low single digit by year end. This would be consistent with a broadly neutral price-cost

outlook for the industry, with pricing broadly on track with energy costs trends and some

limited erosion of margins.

Light side vs. heavy side: who benefits the most from

peace talks?

Light side building products were more at risk from the Middle East disruptions in our

view, and should therefore enjoy more relief with peace negotiations and oil disinflation.

• Renovation exposure: Light side building products have significantly more

renovation exposure, which, as we discussed in previous reports, was more resilient

so far and could have had more downside risks than new build (especially new

residential construction which is already at depressed levels in both Europe and the

US). Heavy side materials are more exposed to new build and more exposure to

infrastructure, implying a generally safer volumes outlook.

• Energy exposure: Light side products also typically have more exposure to natural

gas, which is more correlated with oil. The heavy side materials typically have more

coal exposure, which didn’t experience the same level of inflation as oil and gas.

There could be some potential costs relief in our view for Saint-Gobain (natural gas

exposure) and Sika (oil derivatives exposure). Holcim, Heidelberg Materials and Buzzi

could also enjoy some mild relief into the second half (coal exposure).

Exhibit 4: Stocks mentioned