MS sees Q2 margin boost for Europe's heavy building materials

CRH

12/07/2023 07:48

** Morgan Stanley expects gross margin improvements in Q2 to
lead to small upgrades in 2023 consensus for European building
and construction companies
    ** "Sector outperformance YTD means the market is likely
aware of the earnings tailwind and beats may only be moderately
rewarded," it adds, however
    ** MS upgrades Italy's Buzzi  BZU.MI  to "equal weight" from
"underweight", noting cement accounts for 69% of the group's
revenue and is the most energy intensive, which suggests strong
margin tailwind for FY thanks to lower energy prices
    ** It expects Heidelberg Materials  HEIG.DE  ("equal
weight") and Holcim  HOLN.S  ("overweight") to also benefit from
lower energy costs
    ** It prefers Holcim, noting investors' focus will shift to
growth from M&A and the group's sector-leading decarbonisation
position, supporting returns in the medium term
    ** MS expects CRH  CRH.L  ("equal weight") to reap the least
benefits, but says the group is placed to recover the impacts of
lost volumes through solid price and cost development

($1 = 0.9069 euros)

 (Reporting by Alessandro Parodi)
 ((alessandro.parodi@thomsonreuters.com))