Storm "absence" turns into a negative, government shutdown adds to the blockade. Uncertainty in the US building materials market may abruptly halt profit growth for suppliers.

Due to the combination of the US government shutdown and extreme stormy weather suppressing market demand, building material suppliers may suffer setbacks in their previously strong profit momentum in the fourth quarter. It is widely expected in the market that several building material companies deeply rooted in the US marketincluding Amrize Ltd. (AMRZ.US) based in Chicago, Rockwool A/S (RCWBY.US) in Denmark, and Saint-Gobain Group in Francemay see a decline in profits in the fourth quarter, ending the previous stable growth trend. Morgan Stanley analyst Cedar Ekblom estimated that the $40 billion US roofing materials market achieved a 10% compound annual growth rate in nominal terms from 2019 to 2024, thanks to the post-pandemic renovation boom and price increases and high demand brought on by frequent severe weather events. However, in 2025, the market size decreased by 8%. Last year was the first year since 2015 that the US mainland did not have any hurricanes land. This was good news for homeowners, but it meant a significant slowdown in demand for construction companies. Ekblom said that weather factors can account for up to 35% of the impact on roofing material sales, with storm-induced demand drop and slowing new construction activities leading to a chain impact across the entire building materials industry. Owens Corning (OC.US), another leading company in the US building materials market, CEO Brian D. Chambers revealed in the analyst conference call in November that the company expected roofing material sales to drop to "the lowest level in nearly a decade" in the fourth quarter, adding that sales in the coming quarters would be "relatively weak compared to the past few years." Citi analyst Ephrem Ravi pointed out that Saint-Gobain's full-year operating profit in 2025 could decline by approximately 1%, as its North American business faces continued weakness in the new home construction market, and distributors' destocking of roofing materials further dampens performance. JPMorgan analyst Elodie Rall indicated that the absence of stormy weather in 2025 accelerated destocking in the US roofing materials market, which could weaken the performance of related stocks. She specifically mentioned Amrize and removed the company from the actively watched list before its earnings announcement. Additional Impact from Government Shutdown Rall also mentioned that the US government shutdown had a negative impact on the industry, with the adverse effects already surfacing. Earlier this month, Sika AG (SXYAY.US) announced preliminary performance data below market expectations, attributing part of the reason to the longest government shutdown in US history. The building adhesives and sealants manufacturer stated, "The global market performance in the fourth quarter was weak, especially in the US commercial construction market, and the government shutdown further exacerbated this situation." JPMorgan's Rall predicts that Sika's earnings performance may continue to be lower than expected. Morgan Stanley's Ekblom believes that the decline in sales in the second half of 2025 to the first half of 2026 will drag down the profit margins of the building materials industry, but she emphasizes that this is just a "cyclical regression" in the industry, not the beginning of structural decline. She stated that the core drivers of long-term industry growth are still "intact," including the need for renovation of old residences, increasing repairs from more frequent and intense extreme weather events, and the continuous recovery of the real estate market. Analyst Kevin Kouam pointed out that diversified building material companies like Saint-Gobain may benefit from the growth in demand for infrastructure construction and energy transition projects, which could offset the performance pressure from slowing residential and commercial construction activities.