Martin Marietta profit drops

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Nov 04, 2009 (The News and Observer - McClatchy-Tribune Information Services via COMTEX) -- MLM | Quote | Chart | News | PowerRating -- Martin Marietta Materials reported Tuesday that sales and profit declined in the third quarter as demand for the company's construction materials continued to be hurt by the economic downturn.

The Raleigh company, which produces rock, gravel and other materials, had net sales for the three months that ended Sept. 30 of $428.6million, down 18 percent from the same quarter last year. Earnings per diluted share fell to $1.23, down 34cents from last year, and the company lowered its guidance for the year from $2.70 to $3.30 per share to $2.20 to $2.45 per share.

Martin Marietta said the number of federal stimulus projects reaching the construction phase has been less than the company anticipated, partially because of wet weather in September. The company is also dealing with state governments that are building less in the face of budget deficits, and a severe slowdown in residential and commercial construction.

"Commercial demand is weak, primarily in office and retail construction and, while we believe residential construction has neared bottom in many of our markets, we do not expect growth in the home building sector to materialize significantly in 2009," said Stephen P. Zelnak Jr., chairman and CEO of Martin Marietta.

A bright spot for the company was its Midwest division, which reported record gross profit for the quarter. The division's results were helped by the state of Iowa, which expects to finish the majority of its stimulus projects by the end of the year.

Martin Marietta owns nearly 300 quarries in 28states. The company plans to shut more plants earlier and longer than usual during the fourth quarter. Total production in 2009 is expected to be 21 percent to 23percent less than in 2008.

Martin Marietta has had 14consecutive quarters of declining volume when compared to the same quarter in the previous year. Zelnak said the 36 percent decline since 2006 is the largest percentage decrease the industry has seen since the 1930s.

"It's been a long, tough slog," Zelnak said. "At the same time, we continue to cash flow well. We're running our business well. There's just not much to work with."

Martin Marietta employs about 4,750 people. Over the past two years it has cut costs and hundreds of jobs to offset slumping demand. Expenses in the third quarter were down 13 percent from the same quarter last year.

The company's stock closed at $79.82, down 3 percent for the day and off 22percent from its recent high Sept.17.

david.bracken@newsobserver. com or 919-829-4548

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