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Trade group raises building forecast for 2012

BY HBSDEALER Staff

A new forecast from the Portland Cement Association (PCA) nearly doubles the expected increase in cement consumption for the year, attributing the boost to both changes in construction activity and the projected amount of cement used in future projects. Favorable weather conditions during the first half of 2012 was also a key contributor.

PCA revised its spring forecast upward, anticipating a 6.9% increase in 2012 from 2011 levels, followed by a 5.8% jump in 2013 and a double-digit increase of 10.9% increase in 2014.

“In addition to great construction weather during the first half of the year, real put-in-place construction activity is up 4.2% compared to 2011 levels,” said Ed Sullivan, PCA chief economist. “We expect to see a 5.5% gain on real construction activity this year– after seven consecutive years of decline.”

But Sullivan warned that uncertainty will characterize the near-term economic outlook beyond 2012 and inhibit stronger growth conditions from materializing.

For example, as with previous forecasts, job creation is the critical ingredient to recovery and key to healing the structural difficulties that currently face the construction market. An erosion of consumer and business confidence can adversely affect this, Sullivan said. Under current law, increases in taxes and, to a lesser extent, reductions in spending will reduce the federal budget deficit dramatically between 2012 and 2013—a development that some observers have referred to as a “fiscal cliff.”

“If Congress fails to address the ‘fiscal cliff’ issue during the first or second quarter of 2013, there is the potential for severe adverse economic consequences that could slow the recovery process, potentially leading to a severe decline in 2013 cement consumption,” Sullivan said. “PCA’s baseline projections assume a ‘rational’ Congress that will recognize these risks and take action to minimize restraints on economic growth.”

 

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Sales rise 3.3% at BlueLinx

BY Brae Canlen

BlueLinx Holdings, the Atlanta-based building materials distributor, reported sales of $517 million for its second fiscal quarter, a 3.3% gain over sales of $500.8 million in the same quarter of 2011. The increase in revenue was attributed to increased underlying product prices for both specialty and structural product categories. Overall unit volume declined 1.3% compared with the same period a year ago as seasonal demand was pulled forward by favorable weather experienced during the first quarter of fiscal 2012, the company said.

BlueLinx reported a net loss of $ 3.7 million for the second quarter, compared with $9.8 million in the same quarter a year ago. Gross margins increased to 12.2% from the 11.5% generated in the year-ago period. These increases reflect the company’s continued focus on margin expansion and rising product prices for many of the products distributed, including key grades of wood-based products, and a shift to the warehouse channel from the direct and reload channels.

Year-to-date, BlueLinx posted revenues of $891.4 million for 2011 and $970.7 million for 2012.

"For the second quarter we grew our revenue, increased our margins and kept our operating expenses flat as we expanded our out-of-warehouse business, producing an improved operating profit of $3.9 million,” said president and CEO George Judd. “This is our first quarterly operating profit since the second quarter of 2010. We expect our operating results to continue to improve as we continue to execute our strategy in a recovering housing market."

 

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New orders up 45% at Standard Pacific

BY Brae Canlen

Standard Pacific, one of the nation’s largest home builders, reported revenues of $274.9, a 35% rise over revenues of $204.2 million for the 2011 second quarter. This was due primarily due to a 34% increase in new home deliveries (excluding joint ventures) to 815 homes, the company said.

The increase in new home deliveries was driven by a 55% increase in the number of homes in backlog at the beginning of the quarter as compared with the prior-year period, and a 13% increase in speculative homes sold and delivered during the quarter to 285 homes, compared with 253 homes a year ago. The backlog of 1,266 homes was up 62%.

Net income for the quarter, which ended June 30, was $14.3 million, compared with a net loss of $10.5 million during the same quarter in 2011.

New orders were up 45% in the second quarter compared with the same quarter a year ago.

CEO and president Scott Stowell commented: "We are pleased that the positive momentum we experienced during the first quarter of 2012 continued into the second quarter. We earned $14.3 million,  with deliveries up 34%, revenues up 35%, orders up 45% and homes in backlog up 62% over the prior-year period. Our solid second-quarter results reflect the execution of our strategy and continued improvement in housing market conditions during the quarter."

The Irvine, Calif.-based company purchased $96.6 million of land (2,238 home sites) during the 2012 second quarter. Approximately 36% of land purchases (based on land value) were located in California and 32% in Florida, with the balance spread throughout the company’s other operations. As of June 30, 2012, the company owned or controlled 27,757 homesites, of which 14,966 owned home sites are actively selling or under development. The home sites owned that are actively selling or under development represent a 5.1-year supply based on the company’s deliveries for the trailing 12 months ended June 30, 2012.

Standard Pacific operates in major metropolitan areas in California, Florida, Arizona, the Carolinas, Texas and Colorado.

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