US building materials industry expected to have stable outlook in 2014, aided by 9%-10% growth in construction spending; building materials companies expected to see average revenue growth of 6%-7%: Fitch
December 12, 2013
– Link to Fitch Ratings' Report: 2014 Outlook: U.S. Building and Home Products and Services (Residential Construction Will Continue to Drive Growth)
A more pronounced increase in construction spending should help fortify the stable outlook Fitch Ratings projects for the U.S. building materials industry in 2014, according to the rating agency's annual outlook report for the sector.
Fitch projects construction spending to expand 9%-10% next year, driven primarily by continued strength in the new home construction sector. In addition, 'Home remodeling spending stands to grow modestly next year as housing turnover improves,' said Director Robert Rulla. 'The same holds true for commercial construction spending, while public construction spending should increase only slightly.'
Additionally, Fitch expects revenue growth to average 6%-7% for building materials companies in 2014. That coupled with the sector's stable free cash flow should lead to a modest improvement in credit metrics. That said, 'Rating actions will likely be driven individual issuers' operating and/or financial strategies,' said Rulla.
Fitch's '2014 Outlook: U.S. Building and Home Products and Services' report is available at 'www.fitchratings.com' or by clicking on the above link.
Additional information is available at 'www.fitchratings.com'.