Citi Global Building Products: Cement and Building Materials Briefing and Implications
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Citi's weekly brief on global building products tracks a softening European construction backdrop alongside resilient US remodeling demand. The European construction orders survey showed September orders down 2.7% year-on-year, with the absolute balance falling to -17.5, while civil engineering orders dropped 9.0% to a balance of -12.5. Country performance diverged sharply: the Czech Republic posted the steepest decline (-10%) and Greece was strongest (+31.7%). In corporate news, Sika acquired UK-based Azpects to strengthen its position in innovative growth niches, and Saint-Gobain completed its acquisition of Xypex, a North American waterproofing solutions provider. Citi notes that European light building products companies derive more than 20% of revenue from North America, so stable US remodeling sentiment in the third quarter, despite weak new construction, provides an important demand offset. Looking ahead, improving remodeling demand and order backlogs should support volume resilience for names such as Saint-Gobain and Sika, while Sika's shares remain highly sensitive to delivery of MBCC acquisition synergies over the next four to six quarters. Citi rates Sika Group (SIKA.S) 1, with a target price of CHF 210 per share.