Vulcan Materials 2Q Profit Sinks 84%; Cuts EPS View

   DOW JONES NEWSWIRES 
 

Vulcan Materials Co.'s (VMC) second-quarter profit slumped 84% amid a prior-year divestiture and falling demand as the largest U.S. producer of construction aggregates posted results below expectations.

The company late Monday also cut its 2009 profit target for continuing operations to 40 cents to 65 cents from June's downbeat forecast of 70 cents to $1.

But the stone quarrier, which posted a profit after two quarterly losses in a row, expressed some positives. Chairman and Chief Executive Don James noted increased activity by state transportation departments and "significant" increases in highway contracts awarded in May and June.

James said the activity shows federal-stimulus money "is working its way into the economy. We expect construction activity" related to the recent awards to begin by year's end and notably help aggregates demand in 2010.

Vulcan has suffered as the housing market downturn and recession halted construction projects. The company has cut costs and production and in June, halved its dividend and raised $520 million in a stock sale to reduce debt.

The company reported a profit of $22.2 million, or 20 cents a share, down from $140.8 million, or $1.27 a share, a year earlier. The latest quarter included 6 cents of earnings from discontinued operations while the prior year had $80.5 million in divestiture gains. In June, Vulcan predicted earnings from continuing operations of 15 cents to 30 cents.

Revenue dropped 29% to $721.9 million as shipments slumped 31% and prices rose 3%. Analysts' latest estimate was $759.1 million, according to a poll by Thomson Reuters.

Gross margin fell to 20.2% from 24%.

Vulcan shares closed Monday at $47.80 and were inactive premarket. The stock is down 31% this year.

-By Kathy Shwiff and Kevin Kingsbury, Dow Jones Newswires; 212-416-2357; [e-mail]

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