European Building Materials: Constructing Ideas

研报英文原文证据摘录

European Building Materials: Constructing Ideas

EBITDA estimate seems to have landed somewhere in

the middle of the range of our peers, and investor feedback we received was mostly

supportive of that, though with a slight majority wondering if there might not be more

downside to Building Envelope in the quarter, and not only driven by still soft (or even

softer) resi roofing but possibly also negative price cost in commercial. Our segment

EBITDA is 2-3% below cons with an assumed $25m negative price cost impact based on

our estimate of COGS inflation but it's entirely possible it could be more than that. With

Street estimates now at or near the bottom end of the EBITDA guidance range, several

investors are understandably stress-testing the risk of a cut. Our view is it's not a given

AMRZ needs to warn at Q2, but it's clearly close; we're cautious on the idea of an

improvement in resi in H2 but on the flipside, we're observing positive inflection in some

non-res categories important to AMRZ incl especially manufacturing - which could imply

upside to Materials volumes in H2, a possible offset to more Envelope downside.

Data: US resi and non-res inflecting in opposing directions

In line with our view of a construction K-shape, last week included some important

data releases: US May resi permits and starts came in weak with starts in particular

declining 9% y/y and nearly 20% vs the Q1 run-rate. On the other hand, May (Dodge)

non-res starts came in strong with notable acceleration in manufacturing (+63% on a

trailing 3-month basis), highways (+12%) in bridges (>100%), though partly offset by

warehouses - one of the biggest single categories - taking an unexpected turn lower at

-31%. As we argued in our recent sector notes, with the sector overall lacking