Imerys Drops Most in Two Months as HSBC Cuts Rating: Paris Mover

Imerys SA (NK), a French maker of building materials and paper pigments, fell the most in two months as HSBC cut its recommendation on the stock to underweight because of the drop in France’s housing market.

The stock declined as much as 7.4 percent, the most since May 4, in Paris, where the company is based. The shares were down 3.9 percent to 39.42 euros at 11:08 a.m. They have risen 11 percent this year.

French housing starts in the March-May period dropped 19 percent to 81,271, partly hurt by the phasing out of a tax break, government figures showed last month. An index of executive and consumer sentiment in the 17-nation euro area dropped in June to the lowest in more than 2 1/2 years as concerns about the region’s sovereign debt crisis increased, the European Commission said June 28.

France’s drop in housing starts is “a lead indicator for Imerys’ building materials output in 12 months’ time,” HSBC said in a research note today. The bank cut its target price for Imerys to 40 euros from 44 euros. “We expect trading conditions to be weaker in the second quarter 2012 for Imerys as industrial production is slowing down in Europe.”

First-quarter sales rose 10 percent to 974.4 million euros ($1.22 billion), and operating profit excluding expenses climbed to 126.8 million euros, Imerys said April 26.

“Housing sales is one of the many leading indicators for Imerys, France’s leader for clay tiles and bricks,” said Eric Lemarie, an analyst at Aurel BGC in Paris, in a note today. He maintained a sell recommendation on the stock. “It’s not good for Imerys’s stock price, even though its exposure to France’s new homes is limited to about 6 percent of its revenue.”

To contact the reporter on this story: Francois de Beaupuy in Paris at

To contact the editor responsible for this story: Benedikt Kammel at

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