BofA lowers US RPM earnings on weak construction

06 October 2008 17:21  [Source: ICIS news]

HOUSTON (ICIS news)--Bank of America (BofA) lowered its earnings estimate for US adhesives and sealants producer RPM due to a slowdown in the nation's construction markets, the investment bank said late on Sunday.

Bank of America now expects RPM to report earnings of $1.75/share (€1.28/share) for the company's fiscal year ending in May 2009, down 10 cents from its earlier estimate, according to a research note by Kevin McCarthy, an analyst with the firm.

Residential construction remains weak while spending in commercial construction is slowing, McCarthy said.

At the same time, RPM's price increases have lagged behind raw material cost hikes, McCarthy said.

In the upcoming months raw material prices should drop, he said.

However, demand should also fall, which will likely cause RPM's operating margins to remain flat in 2009.

As of 10:46 hours Houston time (15.46 GMT), RPM shares were down 7.44% at $16.42 on the New York Stock Exchange, amid a wider market decline.

($1 = €0.73)

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By: Al Greenwood
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