European Building Materials: Easing inflation supportive of improving earnings momentum; warming up to Lightside

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European Building Materials: Easing inflation supportive of improving earnings momentum; warming up to Lightside

J P M O R G A N Europe Equity Research

07 July 2026

European Building Materials

Easing inflation supportive of improving earnings

momentum; warming up to Lightside

In this note, we explore the implications for price/cost should we see a permanent end European Building & Construction

to the Middle East conflict and a subsequent normalization of input costs to pre- and Infrastructure

conflict levels. Overall, we find that should the sector succeed in maintaining its recent Elodie Rall AC

price increases despite cost inputs falling, then on average margins would be higher (44-20) 7134-5911

by ~125bps; we would however, note that pricing may see some erosion particularly elodie.rall@jpmorgan.com

in relation to fuel surcharges as well as companies historically passing back and J.P. Morgan Securities plc

maintaining a margin (i.e Kingspan). Overall, from a sector point of view, we think Zaim Beekawa AC

given the ytd underperformance (13% vs. SXXP), we see scope to be more positive (44-20) 7134-4175

zaim.beekawa@jpmorgan.com

given (i) Q2 trends should show an inflection point on LFL trends and lead indicators J.P. Morgan Securities plc

in Europe continue to screen positively (excluding the UK) and (ii) potential tailwinds Jamie Smallbone

on price/cost (and margins) should continue to see a softening of input costs. (44-20) 3493-7015

Furthermore, whilst we have long held a preference for the Heavyside sub-sector jamie.smallbone@jpmorgan.com

(which has been a strong outperformer vs. Lightside), we think the aforementioned J.P. Morgan Securities plc

backdrop on volumes and price/cost could lead to positive momentum for the Manshi Sinha

Lightside sub-sector.