I am listening to the most recent investor presentation for Somero, and I am surprised at two parts of this:
* Growth in China is slow, whereas I would have thought that growth in China would be explosive. China has no experience with this level of precision in concrete and China has a lot of new construction projects. Why haven't they taken off there?
* Growth in Europe seems very high (40% growth 2015 to 2016), but this may reflect growth off a low base
It looks like the 2018 revenue estimates are forecasting a dramatic slowdown to about 5% growth. What are the factors that drive that slowdown?
c70% of sales come from the US so what the US does basically sets the direction for the whole company.
The non residential construction orders in the US eg purchasing managers survey have been a bit weaker than over the last couple of years, so this probably accounts for the slowdown in forecasts for 2018.
have a look at this from reuters
The Commerce Department said on Wednesday that construction spending increased 0.3 percent to $1.22 trillion. But August’s construction outlays were revised down to show a 0.1 percent gain instead of the previously reported 0.5 percent rise.
Economists polled by Reuters had forecast construction spending unchanged in September. Construction spending increased 2.0 percent on a year-on-year basis.
In September, investment on private construction projects fell 0.4 percent after slipping 0.1 percent in August. It was the third straight monthly drop in private construction outlays and reflected a 0.8 percent decline in spending on private nonresidential projects. Spending on nonresidential projects in September was the lowest since April 2016.
Spending on nonresidential structures has now declined for four consecutive months. Spending on oil drilling has been slowing in recent months amid moderate gains in oil prices and ample crude supplies. Spending on residential structures was unchanged in September.
