Martin Marietta expects volume growth in 2011
- Issuer Default Rating (IDR) at ‘BBB’;
- Short-term IDR at ‘F2′;
- Senior unsecured debt rating at ‘BBB;’
- Revolving bank credit facility at ‘BBB;’
- Commercial Paper rating at ‘F2′.
The Rating Outlook is stable.
The ratings and Outlook for Martin Marietta are based on the still relatively substantial demand for construction products prompted by federal and state government funding of transportation projects, the relatively small but growing and very profitable specialty products business (dolomitic lime and specialty chemicals), consistent free cash flow generation, and solid liquidity.
The ratings also take into account the operating leverage of the company and the high level of fixed costs. Fitch’s concerns also include weather-related risks, the potential volatility of state and federal spending on highway construction, the cyclical nature of the construction industry and exposure to environmental issues.
The Stable Outlook reflects Fitch’s macro view of Martin Marietta’s various end-markets for the remainder of 2010 and into 2011.
Notably, Martin Marietta’s heritage aggregates volume increased 8.6 percent during the second quarter following 16 quarters of year-over-year volume declines.
The company forecasts its aggregates volume will grow about 4 percent to 6 percent for all of 2010.
Fitch currently expects Martin Marietta’s volume to be up slightly in 2011, with volume gains in public infrastructure and residential construction offset by declines in non-residential construction.
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