Publicly traded U.S. cement producers just reported results, and those results are a mixed bag.
At Summit Materials, Cement Segment net revenues increased 23.6% to $97.9 million in the fourth quarter of 2022. Cement Segment adjusted cash gross profit margin increased to 47.1% in the fourth quarter, compared to 42.7% in the prior-year period as strong pricing gains more than offset higher variable costs and a greater proportion of sales from imports. Sales volume of cement increased 1.7% reflecting a healthy demand environment. Average selling prices increased 16.6% in the fourth quarter driven by compounding pricing actions taken in 2022 and an ongoing focus to improve customer mix.
Cement Segment net revenues increased 20.0% to $357.7 million for full-year 2022. Cement Segment adjusted cash gross profit margin of 39.6% in 2022 was relatively flat compared to 2021 adjusted cash gross profit margin of 39.9%. Sales volume of cement increased 4.2% and average selling prices increased 12.0% in 2022.
Despite robust product demand, fourth quarter cement shipments for Martin Marietta Materials decreased 10.8% to 0.9 million tons, primarily attributable to wet and cold weather in Texas. Pricing increased 20.8%, aided by largely sold-out conditions and the compounding effect of the year’s multiple price increases.
Cement product gross profit grew 4.4% to a fourth-quarter record of $58.2 million. Product gross margin declined 140 basis points to 39.6%, as pricing gains were not enough to offset the impacts of lower operating leverage and higher energy, raw materials and maintenance costs in the period.
Revenue in Eagle Materials’ Heavy Materials sector, which includes Cement, Concrete and Aggregates, as well as Joint Venture and intersegment Cement revenue, was up 3% to $311 million in its fiscal third quarter. Heavy Materials operating earnings declined 11% to $75 million, primarily because of lower Cement sales volume partially offset by higher Cement net sales prices. Cement sales volume was affected by lower cement inventory levels compared with the prior-year period as well as difficult weather conditions during this quarter.
Cement revenue for the quarter, including Joint Venture and intersegment revenue, was down 2% to $256 million, and operating earnings were down 9% to $72 million. The decline reflects lower Cement sales volume partially offset by higher net sales prices. The average net Cement sales price for the quarter increased 13% to $134.36 per ton. Cement sales volume for the quarter was 1.7 million tons, down 13% versus the prior-year period.
Portland Cement Association Economist Edward Sullivan predicts a slowdown for the second half of the year. Let’s hope prices continue to offset lower volumes.
Mark S. Kuhar, editor