Positive outlook for building products sector
A report just released from Standard & Poor’s Rating Services predicts a stable 2011 for most building products manufacturers, despite continued weakness in construction activity. The report, entitled “Efficiency Gains Should Keep The U.S. Building Materials Sector On An Even Keel in 2011, Despite Low Demand," predicts that most companies will remain cash flow positive and maintain adequate liquidity to meet near-term obligations, as well as funding possible working capital growth should markets recover.
"Most companies in the sector have already lowered their costs, which we think will allow them to continue to navigate an extended period of overall lower demand," said Standard & Poor's credit analyst Thomas Nadramia. "As a result, we expect the operating performance of the companies we rate in this sector to generally remain flat, or improve modestly, over the next few quarters."
Debt maturities for rated U.S. building materials companies will be manageable in 2011 and 2012, according to the S&P report, with only about $1 billion and $2 billion, respectively, coming due during these periods.