Holcim Ltd (HOLN.SW), a leading global building materials company, reported a strong third quarter in 2024, with CEO Miljan Gutovic announcing record recurring EBIT and EBIT margin, driven by strategic initiatives and market demand, particularly in North America. The company is on track for a record year with strong sales growth and margin projections, complemented by a share repurchase program and strategic acquisitions. Holcim also plans to list its North American business in the United States in the first half of 2025.
Key Points
- Record recurring EBIT of CHF 1.67 billion and record EBIT margin of 23.5% for Q3 2024.
- Strong market demand in North America, supported by federal investments and infrastructure projects.
- Completion of six value-added acquisitions and a 23% increase in recycling of construction and demolition materials.
- On track for a record year with increased net sales in local currency and an EBIT margin above 18.5%.
- Planned listing of North American business in US to increase stakeholder value.
- Share buyback program underway, with CHF 833 million repurchased by September 2024.
- Significant margin expansion in Asia, Middle East and Africa, with the Solutions & Products segment leading in net sales and recurring EBIT growth.
Company Outlook
- Low single-digit net sales growth expected in local currency for the full year.
- The EBIT margin is expected to remain above 18.5%.
- Strong cash generation expected, exceeding CHF 3 billion.
- Target 10 million tons of recycled building materials, a 20% increase from the previous year.
- Plans for a slight recovery of the residential market in 2025, supported by expected interest rate cuts.
Negative Points
- Organic growth remained flat, with local currency net sales growth primarily driven by net acquisitions.
- The free cash flow target was set conservatively at $3 billion, below the previous year’s $3.7 billion.
Positive Points
- Strong demand in North America with over CHF 4 billion in federal investments and infrastructure projects.
- The Solutions & Products segment stood out with double-digit EBIT growth, particularly in roofing systems.
- The acquisition of OX Engineering Products is expected to contribute to further growth.
Missed Objectives
- Despite the record results, organic growth did not increase.
Question and Answer Highlights
- The ECOPact and ECOPlanet initiatives are gaining momentum, with the aim of exceeding 55% of total sales in Europe by 2030.
- Capital investments for CCUS projects will be spread over the next six years, with significant EU funding.
- Mergers and acquisitions activity continues, with a focus on green roofing and recycling businesses.
- Strong margins in North America are expected to continue, with robust pricing.
Holcim’s strategic focus on sustainable solutions such as ECOPact and ECOPlanet, and its commitment to recycling and value-added acquisitions, position the company for continued growth and margin expansion. With plans to list its North American business and a conservative but optimistic financial outlook, Holcim demonstrates a balanced approach towards capitalizing on market opportunities and enhancing shareholder value.
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