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One name I've followed for a long time, is Mexican cement maker Cemex (CX) which is one of the world's giants (#3 in the world). Unfortunately they are so intertwined with the US market, the stock has been a disaster for a while. I was getting excited about 6 weeks ago, as the technical condition of the chart began to improve, and it looked like a breakout was happening, but just like that, the chart snapped. However, they do not seem to have major Chinese exposure.
- Cemex, the world's number-three cement maker, cut its 2008 forecast for pre-tax earnings to $5.3 billion on Monday, battered by the weak U.S. housing market and a slowdown in key European markets
- "We continue to face a difficult economic environment in the United States with construction falling more than originally anticipated," Chief Financial Officer Rodrigo Trevino said in a statement.
- Cemex, the top building materials company in the United States, had forecast 2008 earnings before interest, tax, depreciation and amortization (EBITDA) of $5.6 billion. "We now expect EBITDA for 2008 of about $5.3 billion," Trevino added.
- For Cemex, which competes globally with Switzerland's Holcim (HOLN) and France's Lafarge (LAFP), the impact of the U.S. housing crisis comes as Cemex increased its market share through last year's $16 billion acquisition of Rinker, which had 80 percent of its operations in the United States.
- "We now expect domestic cement volume in the United States to decrease by around 12 percent, ready-mix volume to decrease by about 21 percent and aggregates volumes to decrease by around 20 percent for the full year 2008," Cemex said. (sounds like an economy ready to rebound any minute now)
- Housing slowdowns in Spain and the United Kingdom are also hurting Cemex, which has operations in more than 50 countries. (notable - as we've been saying the UK is a mini USA and both countries followed the Americans into lax mortgage standards which led to major housing bubbles - in fact many say Spain has the worst of the bunch)
- In Spain, where the economy is cooling after a decade of high growth levels, the company expects cement volumes to decrease by about 17 percent this year. "This was lower than we expected and a little worrying given that Spain is one of Cemex's top markets," said a Mexico City-based cement analyst who declined to be named.
- The UK housing market is also cooling as the economy falters, feeling the impact of the U.S. credit crunch. The average cost of a UK house has fallen by about 8 percent from a peak in August last year.
- That follows a near decade-long boom, during which the price of the average UK home more than tripled. (easy credit, easy money, lax guidelines - another wonderful US import!) Cemex said it sees British cement volumes falling about 9 percent in all of 2008.
5 comments:
Reuters) - Goldman Sachs downgraded U.S. financial and consumer discretionary sectors to "underweight," saying these sectors would lag in an environment where inflation, consumer weakness, fiscal stimulus and global growth would drive the overall market and relative sector returns.
The energy, materials and information technology sectors will likely outperform in such an environment, Goldman added.
The brokerage had earlier rated the financial sector "neutral" and consumer discretionary sector "overweight."
Goldman has an "overweight" rating on the energy, materials and information technology sectors.
FYI
Goldman said the market will stay within the same range that it has been trading in since the beginning of the year although increased volatility provides for the possibility of large swings within the range.
(Reporting by Supantha Mukherjee
sheesh. Now?
I was posing that thesis on financials and consumer discretionary a year ago. Something about horse leaving barn....
Agree on range bound sideways market with wild swings.
Is it any surprise that the GSs and MSs of the world always seem to announce their research late? That research costs money and it's what gives them their edge. Once they feel the edge has dissipated they publish their research. That's why when all the big players jump on board they at least think the end of the thing they are announcing is near.
Can any idea, why RIO is lagging the sector. Just touched 200ma today.
I really would not focus on day to day stock movements and try to "attach" a reason to it. Stocks are up 4% one day, down 3% the next - nothing changed from that 1st day to the 2nd.
Most brazilian stocks are getting hit - take a look at GFA, SID, GGD, etc - these are the main ones I watch - most are down 3-4% today, RIO is in fact up. This iron ore news is a net positive for them and CLF.
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