Fitch: Weaker Demand but Normalizing Dynamics for Building Products in 2024

Fitch Ratings, New York, reported it expects overall weaker demand for North American building products and materials companies in 2024.

In a new report, North American Building Products and Materials Outlook 2024, Fitch projects nonresidential construction will decline moderately, residential remodel activity will remain soft and U.S. housing starts will be slightly lower next year than in 2023.

Fitch said it expects sector median EBITDA margins to be flat to slightly higher in 2024 as benefits from raw material deflation and flat to lower energy costs are modestly offset by still-elevated labor costs.

“Fitch expects a weaker but fairly stable operating environment for North American building products and materials companies in 2024 as private construction markets are projected to underperform public markets,” said Ryan O’Loughlin, Director in Fitch’s U.S. Corporates group. “Moderating input cost inflation and normalized channel inventories and supply chains should enable issuers to manage costs and return to typical production and inventory levels.” Most building products and materials companies in Fitch’s coverage have “ample headroom” relative to their ratings–reflected in the majority having Stable or Positive Outlooks–Fitch said. “Balance sheets and liquidity positions are generally strong due to solid recent performance and disciplined capital allocation strategies,” the report said.