08 January 2008 20:12 [Source: ICIS news]
HOUSTON (ICIS news)--US adhesives and sealants producer RPM International expects sales in 2008 to increase, in part because of strong demand from infrastructure projects, the company said on Tuesday.
Infrastructure is one of the few construction sectors that is expected to grow in the upcoming months, according to market experts.
The US housing market is not expected to recover from its two-year slump until later this year - at the earliest. The downturn is beginning to drag down other sectors connected to the housing industry, such as retail and office construction.
However, infrastructure and other heavy industrial projects have yet to show signs of a slowdown, according to the Associated General Contractors of America, a trade group.
Such a trend bodes well for RPM, which makes products for industrial and infrastructure projects, said Frank Sullivan, chief executive.
Sullivan made his comments during a conference call, which followed the company's second-quarter earnings release.
Second-quarter industrial sales reached $605m (€411m), up 14.5% from the same time last year, RPM said. Out of that increase, acquisitions made up 2.9%, favourable exchange rates made up 4.5%, and organic growth made up 7.1%.
Several RPM product lines are growing in double digits in such industries as power generation, petrochemicals and aerospace, Sullivan said. "We remain bullish about the underlying strength in our industrial end markets."
Most of the acquisitions that RPM plans to make during the 2008 fiscal year will be small to medium companies that make industrial products, Sullivan said.
RPM has proposed $100m worth of acquisitions for the year, Sullivan said. However, those deals have not closed and many could fall through.
In other news, RPM continues to be sensitive about commercial construction, although the sector has yet to affect the company's product lines, Sullivan said.
In general, commercial construction follows trends in residential markets, although there is a lag time.
Due to the weakness in the US housing market, Sullivan said he expects the company's consumer sector to be flat or to increase slightly by the end of the fiscal year.
The little growth that the sector does experience will be due to the nature of RPM's consumer products, Sullivan said. The line is geared towards small low-cost home repairs, Sullivan said.($1.00 = €0.68)
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