The output of building materials recorded 6.2% year on year growth in January to May 2013, but the positive performance is not entirely relevant since it is backed by the double-digit annual rise in only two months, on low base comparison (under extreme weather conditions in 2012), which add to the seasonal factor. According to market players’ opinions, domestic demand for construction materials maintained relatively stable at low levels over the period. Most of the demand came from the buildings segment, particularly renovations, as the civil engineering works, expected to revive the construction market this year, dropped by 9.7% year on year in Q1 and by 9% year on year in January to May.

The cement market inched up by 3% year on year in Q1/2013, propped by the double-digit advance of residential constructions favoured by good weather during the period. Market players express hopes of stagnation of the market this year, but prospects are rather pessimistic as long as civil engineering works, the key driver of the cement segment, continue on downward path. Some improvement may be seen in H2, with the un-blocking of EU funds under the sectoral transport programme. On the other hand, under the proposed budget adjustment for 2013 made public by the government at end-July, the budget of the transport ministry will be reduced by approximately EUR 212mn (of the total EUR 1.6bn).

Consumption of wall building materials did not record significant changes in H1/2013 compared to 2012, but the demand was very low particularly in May and June. The brick market outlook remains rather gloomy, considering that the number of permits for residential buildings continued to decline this year. The difficult environment on the brick market drove many smaller producers out of business, while projects regarding new plants have been postponed.

The deterioration of the situation in the construction sector beginning with H2/2012 reflected in the financial results of the building material producers as well. However, overall the largest players managed to cope with the difficult market environment and reported improving y/y results. Only two of the top 10 construction material producers recorded decline of turnover in 2012, according to our research based on financial data made available by the finance ministry in July 2013. For comparison, in 2011 nearly half of the major 10 companies recorded year on year drop of net turnover. In terms of profitability, four of the major 10 construction material producers reported negative net result in 2012, the same as in 2011. In 2012, the cumulated net turnover of the top 10 largest building material makers neared EUR 1bn.