Vulcan to Merge Operating Regions - Analyst Blog
December 21 2011 - 5:45AM
Zacks
Vulcan Materials Company (VMC) recently
announced its plan to consolidate its eight operating regions into
four, namely East, South, Central and West. The strategic move on
the company’s part is aimed at reducing overhead costs and
increasing operating efficiency.
The preliminary decision was taken by the senior management
during the first half of the year but the approval from the
company’s Board of Directors was received at its quarterly meeting
on December 09, 2011.
The company had long planned to decentralize its administration,
especially its sales, marketing and operating functions in order to
improve efficiency at a much lower cost. The recent announcement
will enable Vulcan to execute its plan.
The consolidation of operating regions is expected to generate
an ongoing annualized pre-tax cost savings of roughly $30 million,
apart from another $25 million in annual pre-tax overhead
reductions already realized in the current year. Additionally, as a
part of the process approximately 200 positions, including overhead
and administrative staffs, will be laid off.
Vulcan is optimistic about each of its operating segments for
the upcoming quarters. Almost all the segments are expected to
witness higher volumes and higher prices for its products,
offsetting higher costs.
Further, the company’s selling, general and administrative
expenses in 2011 are projected to be approximately $25 million,
which is lower than the prior-year level. Vulcan Materials
anticipates capital spending of $100 million for the year.
Based in Birmingham, Alabama, Vulcan Materials, a Zacks #3 Rank
(Hold rating) stock, is engaged in the production, distribution and
sale of construction aggregates, and other construction materials
and related services in the U.S. and Mexico.
Vulcan Materials is the nation’s largest producer of
construction aggregates and a leading producer of other
construction materials. The company’s key competitors include
CEMEX, S.A.B. de C.V. (CX), Lafarge
S.A. (LFRGY), Cement Roadstone Holdings
and Martin Marietta Materials Inc. (MLM).
CEMEX SA ADR (CX): Free Stock Analysis Report
LAFARGE SA-ADR (LFRGY): Free Stock Analysis Report
MARTIN MRT-MATL (MLM): Free Stock Analysis Report
VULCAN MATLS CO (VMC): Free Stock Analysis Report
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