Merger Deals in Focus for European Construction Companies Amid Slowing Momentum -- Sector Preview

By Nina Kienle

European construction companies are expected to look ahead amid slowing momentum, with investors focusing on some key mergers and acquisitions that got under way in the last quarter. Here is what you need to know:

WHAT TO WATCH:

-- ACQUISITIONS & SALES: Key events that might be of interest for building products investors include Saint-Gobain acquiring Kilwaughter, Buzzi completing the sale of operations in Ukraine to CRH, and the Adani Group reportedly holding talks to buy Heidelberg Material's Indian Cement operations, Citi analysts said in a note to clients.

-- FRANCE'S NEW TAX: Budget discussions are expected to intensify over the course of 2025, Barclays analysts said in a note. An increased corporate tax rate would, of course, be the most significant measure in the short term, they said. The analysts estimate Vinci's, Eiffage's and Saint-Gobain's taxable bases in France at respectively 55%, 85% and 18% of group profit.

-- GUIDANCE & EXPECTATIONS: Key focus for the season beyond near-term earnings is preliminary 2025 expectations, whether backlogs and management commentary are supportive of positive volume development and if the sector has capacity to absorb price increases next year, JPMorgan analysts said in a note. The analysts, from a stock level perspective, continue to favor Saint-Gobain over Sika and say that expectations for Heidelberg Materials are rather underwhelming compared with earnings growth expected at Holcim. With momentum moderating, the focus could shift to corporate events, JPM said.

WHEN COMPANIES ARE SCHEDULED TO REPORT:

-- Vinci: Oct. 24

   -- Sika:   Oct. 25 

-- Holcim: Oct. 25

Write to Nina Kienle at nina.kienle@wsj.com

(END) Dow Jones Newswires

October 23, 2024 06:27 ET (10:27 GMT)

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