Romania Construction Materials Report - Q3, 2013

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Romania Construction Materials Report - Q3, 2013

This report discusses the construction materials sector in Romania and trends through Q3 2013. It also includes briefs on corporate developments for firms including Holcim, Lafarge, Cemacon, and Adeplast, among others.

Romania’s construction materials market was dragged down by the poor performance of the construction sector from January to September 2013, as infrastructure works moved at a sluggish pace while activity in building construction remained low. However, output of construction materials increased by 3.3% y/y in H1 2013, particularly supported by the double-digit annual growth in February and April when the low-base helped such performances. In May and June, production of construction materials returned to negative annual growth rates.

On the upside, in the medium and long run, there is enough room for development in all the segments of the construction market, though the accelerated growth pace prior to the crisis is unlikely to be seen soon. In the buildings segment, there are premises for growth in both the residential and commercial segment—approximately 80% of the dwelling stock is older than 20 years, while the retail space per capita is still below the European average. Road infrastructure construction also has growth potential, considering that 42% of the roads in Romania are not asphalt-paved.

Key Points:

• In corporate news, cement maker Holcim Romania announced plans for EUR 18mn investments in 2013. Lafarge Romania launched a new hydraulic clinker product range named Soilfix. Ceramic blocks producer and distributor Cemacon reported 38% y/y higher sales volume in January to September 2013. And construction materials manufacturer Adeplast failed to sell a 33.3% stake in an IPO launched on the Bucharest stock exchange in October.

• The cement market shrank by 6% y/y in volume terms in H1 2013 and is expected to decline by 2%–5% y/y in full year 2013. In Q1 2013, the market recorded a slight positive annual performance, but prospects for the sector are rather pessimistic, considering that infrastructure construction, the main driver of cement demand, dropped by 6% y/y in Q2 alone.

• The masonry market showed no signs of revival in January to September 2013, as the construction of buildings continued to decline over the period. Notably, residential constructions recorded impressive annual growth in July and August (up by 52.3% y/y and 47.8% y/y respectively), while the number of residential permits also increased y/y in Q3. Nonetheless, the residential construction activity should see sustained improvement for a longer period in order to have positive impact on the masonry market.

• The construction and building materials sectors are unlikely to rebound in the short run, as public spending on infrastructure investments has been cut down and the unblocking of major projects is sluggish. Furthermore, private investors’ confidence remains at a low level, which reflects in the lack of new projects on the buildings segment.

Table of Contents

Executive Summary
1. Market overview
1.1 Construction works performance remains poor in H1/2013, activity picks up in Jul-Aug
1.2 Romanian construction sector lags behind EU average in Q2/2013, but July indicators notably improve
1.3 Diminishing construction activity impacts negatively upon GDP performance in H1/2013
1.4 Investments in national economy down 2.3% y/y in H1/2013, construction sector’s stake diminishes abruptly
1.5 Number of finished dwellings returns on negative y/y path in Q2/2013
1.6 Number of building permits drops 1.7% y/y in Jan-Sep 2013
1.7 Construction industry association expects sector value below EUR 9bn in 2013
1.8 Turnover of construction material producers keeps shrinking in Jan-Jul 2013
1.9 Construction materials output up 3.3% y/y in H1/2013
1.10 Producers’ prices up 2.2% y/y in H1/2013

2. Cement, concrete
2.1 Cement market shrinks 6% y/y in volume terms in H1/2013
2.2 Holcim plans EUR 18mn investments in improving production efficiency
2.3 Lafarge launches new hydraulic clinker
2.4 Heildelbergcement’s sales in Romania, Poland, Czech Republic follow downward path in H1/2013

3. Ceramic bricks, tiles
3.1 Masonry market shows no sign of revival in H1 2013
3.2 Ceramic tile sales are 65% covered by imports
3.3 Cemacon reports 38% y/y higher sales volume in Jan-Sep 2013
3.4 Cemacon puts for sale old industrial platform, land plot in Zalau
3.5 Lasselsberger’s ceramic tiles sales rise 15% y/y in volume terms in H1/2013
3.6 Macon completes kiln aimed at doubling terracotta production capacity

4. Thermal insulation, finishing materials
4.1 Thermal insulation works slow down y/y in H1 2013
4.2 Adeplast takes over local activities of German manufacturer Schomburg
4.3 Adeplast’s IPO fails amid insufficient demand.
4.4 Advent International sells shares in painting producer Deutek from Advent International

Number of pages: 17
Release Date: Mon, 04 Nov 2013