European building materials - Fast start underpins full year estimates

Davy Research
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It has been a good quarter for the building materials stocks. Off an easy comparison base and helped by mild Q1 weather, like-for-like (LFL) sales and EBITDA should be well up across the sector. While headline euro area data-points have softened, underlying construction has been rock solid – even in the UK. That means positive trading updates with guidance maintained and little downside risk to FY estimates. With the sector up c.25% year-to- date, part of that is reflected in share prices. However, with downgrades largely off the table, we think the sector can continue its good run. We reiterate our preference for CRH, Buzzi Unicem and HeidelbergCement (HEI).