Cemex Acquires RC-Baustoffe Berlin to Expand Circularity Business
As part of its ongoing efforts to grow its circularity business, Cemex, S.A.B. de C.V. CX acquired a majority stake in a recycling company, RC-Baustoffe Berlin GmbH & Co. KG, part of Ulm, Germany-based the Heim Group.
Inside the Headlines
RC-Baustoffe Berlin, which processes mineral construction, demolition, and excavation materials (CDEM), will integrate with Regenera, a Cemex business. Regenera provides circularity solutions to increase the life of construction products and materials with reuse in value-added products. The acquired facility can process up to 400,000 tons of material per year. Regenera will turn these materials into repurposed aggregates for concrete production.
Along with the CDEM, RC-Baustoffe Berlin runs the first plant in Germany that permanently stores biogenic carbondioxide in recycled mineral waste.
The buyout will help Cemex strengthen its commitment to circularity through Regenera, as concrete is an infinitely recyclable material. Regenera recovered more than 9 million tons of CDEM in 2023 and intends to reach nearly 14 million tons annually by 2030.
In July, Cemex partnered with the Ellen MacArthur Foundation to continue to leverage the potential of the cement value chain in circularity. The Ellen MacArthur Foundation is the world’s leading circular economy network, working with ambitious, like-minded organizations globally.
Earlier in May, it collaborated with the Mission Possible Partnership to conduct an analysis of the potential of decarbonization levers at Cemex's Balcones cement plant in Texas in partnership with the Bezos Earth Fund. This analysis will accelerate Cemex's net-zero carbondioxide emissions commitment by 2050.
Cemex’s Share Price Performance
CX’s stock plummeted 15.7% in the past three months compared with the Zacks Building Products - Concrete and Aggregates industry’s 9% decline.
Image Source: Zacks Investment Research
In the first half of 2024, the company witnessed lower Cement volume in the United States, Europe and SCAC regions. Ready-mix volume was down in almost all the regions, excluding Mexico, where it was up just 2% in the first half. Aggregates volume was also low in EMEA and SCAC regions.
Pricing declined in MEC regions for Cement and Aggregates. For Ready-mix, pricing was low in EMEA and SCAC regions.
For 2024, the company expects Ready-mix and Aggregates volume to decline across the regions (barring Mexico). Cement volume is likely to decline in the United States, MEA and SCAC regions in 2024.
Nonetheless, an uptick in spending on infrastructure and public construction is set to continue driving growth in the industry. The industry is also poised to benefit from improvements in the single-family residential construction market and advantageous pricing dynamics amid challenging conditions. Companies like Vulcan Materials Company VMC, Eagle Materials Inc. EXP and Summit Materials, Inc. SUM have been leveraging these favorable trends to their advantage.
The above-mentioned companies currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Concrete & Aggregates Industry's Current Valuation
On the basis of the forward 12-month price to earnings, which is a commonly used multiple for valuing Building Products - Concrete & Aggregates stocks, the industry is currently trading at 18.3X compared with the S&P 500’s 21.2X and the sector’s 17.4X.
Over the past five years, the industry has traded as high as 24.5X, as low as 13.9X and at a median of 20X, as the chart below shows.
3 Concrete & Aggregates Stocks to Keep an Eye On
Eagle Materials: This Dallas, TX-based company produces and supplies heavy construction materials, light building materials and materials used for oil and natural gas extraction in the United States. Eagle Materials has benefited from a proactive maintenance strategy, effectively managing costs and ensuring smooth operations. It has also made significant strides in sustainability and key projects.
Eagle Materials shares have surged 30.8% in the past year. Earnings for fiscal 2024 are expected to grow 13.2%.
Vulcan Materials Company: This Birmingham, AL-based company produces and supplies construction aggregates, asphalt mix as well as ready-mixed concrete. The company’s focus on four strategic initiatives — Commercial Excellence, Operational Excellence, Strategic Sourcing, and Logistics Innovation — should enhance price performance and operating efficiencies.
Shares of Vulcan have gained 8.2% in the past year. VMC surpassed earnings estimates in three of the trailing four quarters and missed on one occasion, with the average surprise being 2.5%. Earnings for 2024 are expected to rise 11.7%.
Summit Materials: Based in Denver, CO, this is a construction material company. Summit Materials has been witnessing solid pricing growth across all lines of business and expects the trend to continue in 2024. The company has also been optimizing its portfolio as it intends to shift toward a more materials-led portfolio.
Summit Materials shares have gained 2.7% in the past year. Earnings for 2024 are expected to rise 7%. SUM surpassed earnings estimates in all the trailing four quarters, with the average surprise being 19.3%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Cemex S.A.B. de C.V. (CX) : Free Stock Analysis Report
Vulcan Materials Company (VMC) : Free Stock Analysis Report
Eagle Materials Inc (EXP) : Free Stock Analysis Report
Summit Materials, Inc. (SUM) : Free Stock Analysis Report