Holcim Ltd Q3 2024 Trading Update

Holcim Ltd (SIX:HOLN.SW), a leading global building materials company, reported a robust third quarter in 2024, with CEO Miljan Gutovic announcing record recurring EBIT and EBIT margin. This performance was driven by strategic initiatives and strong 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 buyback program and strategic acquisitions. Holcim also plans to list its North America business in the U.S. in the first half of 2025.

Key Takeaways

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-accretive acquisitions with a 23% increase in recycling of construction and demolition materials.
On track for a record year with net sales increase in local currency and EBIT margin above 18.5%.
Planned listing of North America business in the U.S. to enhance stakeholder value.
Share buyback program in progress, with CHF 833 million repurchased by September 2024.
Significant margin expansion in Asia, the 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 in local currency projected for the full year.
EBIT margin is expected to remain above 18.5%.
Strong cash generation anticipated, exceeding CHF 3 billion.
Aiming for 10 million tonnes of recycled construction materials, a 20% increase from last year.
Plans for a slight recovery in the residential market in 2025, supported by expected interest rate cuts.

Bearish Highlights

Organic growth remained flat, with local currency net sales growth primarily driven by net acquisitions.
Free cash flow target set conservatively at $3 billion, below the previous year's $3.7 billion.

Bullish Highlights

Strong demand in North America with over CHF 4 billion in federal investments and infrastructure projects.
Solutions & Products segment noted for double-digit EBIT growth, particularly in roofing systems.
OX Engineering Products acquisition expected to contribute to further growth.

Misses

Despite record results, organic growth has not increased.

Q&A Highlights

ECOPact and ECOPlanet initiatives are gaining momentum, with a target of over 55% of total sales in Europe by 2030.
CapEx for CCUS projects to be spread over six years, with significant EU funding.
M&A activity continues, focusing on green roofing and recycling businesses.
Strong margins in North America expected to continue, with robust pricing.

Holcim's strategic focus on sustainable solutions such as ECOPact and ECOPlanet, along with a commitment to recycling and value-accretive acquisitions, positions the company for continued growth and margin expansion. With plans to list its North America business and a conservative yet optimistic financial outlook, Holcim demonstrates a balanced approach toward capitalizing on market opportunities and enhancing shareholder value.

Full Transcript – None (HCMLF) Q3 2024

Unidentified Company Representative: Good morning, and welcome to the analyst and investor webcast for Holcim's Third Quarter 2024 Trading Update. My name is Bernd Pomerin, and I'm pleased to welcome Miljan Gutovic, our CEO; and Steffen Kindler, our CFO, who are with me today. After their financial presentations, you will have the opportunity to ask questions. And with this short intro, I hand it directly to Miljan. Miljan, please?

Miljan Gutovic

Good morning. Thank you, Bernd. Good morning to all of you, and a warm welcome to Holcim's trading update. Steffen and I are pleased to present our results, and we will turn it over to you afterwards for your questions. We have achieved an industry-leading earnings profile with broad-based growth drivers, and our resilient business model has delivered a record recurring EBIT and record EBIT margin.

In the third quarter, we delivered record recurring EBIT of CHF 1.67 billion with a record margin of 23.5%. This performance reflects our strategic priorities combined with the dedication of Holcim's 64,000 employees. Our value strategy with high-value solutions continues to deliver superior performance in this environment. In Q3, we executed six value-accretive acquisitions in attractive markets and accelerated our circular construction initiatives, increasing the recycling of construction and demolition materials by 23%.

Market Dynamics

Fundamental demand across all our key markets remains strong. In North America, demand is driven by continued federal and state investments, reindustrialization, and reshoring efforts. We expect robust demand in infrastructure projects, supported by significant funding from the U.S. Department of Transportation.

Financial Highlights

In Q3, we recorded a 9.1% increase in recurring EBIT (local currency) and a 4.6% increase in Swiss francs. Our EBIT margin increased by 160 basis points. We are on track to deliver industry-leading margins again this year.

Our recent acquisitions target the most attractive markets, underpinning our strategic priorities. In Latin America, we completed significant acquisitions, enhancing our presence in a high-growth region. We are investing in aggregates and ready-mix in Europe while expanding our recycling capabilities through targeted acquisitions.

Conclusion

Our commitment to sustainability through initiatives like ECOPact and ECOPlanet positions us well for future growth, and we are excited about the progress we've made in delivering industry-leading margins and record earnings in the coming year. Thank you for joining us today.