HeidelbergCement's preliminary results, released last week, give us a better idea of what to expect when fellow European cement companies Lafarge and Holcim report in the coming weeks. For the fourth quarter, Heidelberg mentioned that the early winter start in Europe hurt demand for cement, aggregates, and concrete shipments. While Lafarge and Holcim may report relatively weak European volumes due to the weather, we view this as a timing issue rather than an indication of the health of construction activity. Given still-weak demand for building materials in developed markets and rising energy prices, we expect cost controls to be a key theme for both Lafarge and Holcim. Therefore, we look for both firms to mention progress on increasing their ability to use alternative fuels to heat their cement kilns.
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