Renovation firms’ stock rises on EU ‘green recovery’ boost

BRUSSELS (Reuters) – A pledge from European policy-makers to pour funds into energy-saving refurbishments of old, draughty buildings has boosted the outlook for the green construction sector as it seeks to shake off the impact of the coronavirus, fund managers said.

FILE PHOTO: Workers stand on a building under construction in Fontenay-sous-bois near Paris following the outbreak of the coronavirus disease (COVID-19) in France, May 28, 2020. The placard reads “Start of work”. REUTERS/Charles Platiau

Buildings absorb 40% of energy consumed in Europe – much of it produced by fossil fuels – threatening the European Commission’s push to cut net European Union emissions to zero by 2050.

The European executive’s stimulus package unveiled on Wednesday to battle the pandemic’s economic fall-out, resolved to fix this.

Investors said the prospect of EU support made firms specialising in renovations more attractive.

It signals “a significant change in terms of the potential growth rates of those companies,” Charlie Thomas, head of strategy and sustainability at London-based Jupiter Asset Management, told Reuters.

“We see a positive inflection for companies exposed to insulation demand and construction,” Morgan Stanley analysts said in a note to clients on Friday, citing insulation firms Kingspan (KSP.I) and Rockwool (ROCKb.CO) as potential beneficiaries.

Rockwool’s shares in particular have rallied. They were 1.68% higher in late trade on Friday, taking this year’s gains to nearly 20%, while Kingspan was up around 0.5% on Friday and is marginally higher on the year.

Europe’s construction sector is expecting a 50% drop in orders this quarter as coronavirus lockdowns have stifled the economy.

The EU executive did not disclose how much would be earmarked, but said it wants to double Europe’s annual renovation rate for buildings, currently around 1%, as part of its planned spending of 1.85 trillion euros in 2021-27.

“Our most important principle is energy efficiency,” EU energy chief Kadri Simson told Reuters, pointing to Soviet-era buildings in eastern Europe as a priority for energy-saving renovations.

Simson said that should create jobs, chiming with industry groups who say that, with public support for re-training, the construction sector could absorb an extra 4 million workers within 18 months – including many laid off from other sectors.

Additional reporting by Simon Jessop; writing by Kate Abnett; editing by Barbara Lewis

Source Article

Next Post

Get in line: British shoppers set for lengthy waits as high streets reopen

Retailers, banks and cafés are grappling with a very British problem: whether shoppers can be relied on to queue patiently when high streets finally begin to emerge from hibernation over the next few weeks. Customers will face lengthy lines outside more shops and cafés as the lockdown eases, according to retailers, […]