CRH PLC CRH

The global cement industry continues to face challenging conditions. The industry derives 45%-55% of its demand from public spending, but recent austerity measures have led to a lack of construction activity, which has hurt volume. Slower growth in the developed markets has also greatly affected the sector, as the fiscal stimulus introduced during the financial crisis has been exhausted, further weakening public construction demand. Though we think demand from the private sector is key moving forward, CRH's growth prospects appear to be intact, given the firm's revenue diversification through residential, commercial, and infrastructure activities and a healthy balance sheet. Although headwinds from its heavy European exposure and public spending cuts will persist in the short run, we think CRH is very well positioned to capitalize on any material rebound in construction activity over the long run.