Governments around the world are currently trying to get the economy going again with infrastructure programs worth billions. Houses, roads, bridges - construction is going on for all it's worth. This is playing into the hands of cement manufacturer Holcim. The Group not only started the year with new records, it also changed its name. For the sake of simplicity, LafargeHolcim, as the company called itself after the merger in 2015, will now become Holcim again.
The rebranding on one hand, the rebound of the business on the other: The Corona pandemic had Holcim firmly in its grip, especially in the first half of 2020. From January to June, sales fell by 18% and profits even dived by two-thirds. However, the company, which is now based in Zug, reacted quickly to the crisis and, among other things, cut costs significantly. Together with a revival of business in the second half, the group managed to dent the dent noticeably by New Year's Eve. Revenues for the year as a whole fell by "only" 5.6%, and the bottom line was ultimately a quarter lower.
The first quarter of 2021 shows that things are still looking up: from January to March, sales rose again slightly by 1.3%. Demand was particularly strong in the emerging markets. Cement sales rose by 17% in Latin America and by as much as a fifth in Asia. Due to price increases and cost reductions, profit advanced much faster than sales. The operating result even doubled to CHF 528 million. This not only clearly exceeded analysts' expectations, but also represents a new record for the company. "We believe that the growth momentum will continue in the course of the year," says Group CEO Jan Jenisch, looking positively ahead.
That the CEO is serious about this is underlined by the raised outlook. Instead of an increase in adjusted operating profit of at least 7%, the manager is now holding out the prospect of at least 10%. Jenisch is drawing hope from the numerous economic stimulus programs, such as US President Joe Biden's CHF 2 trillion program and the UK's CHF 800 billion infrastructure plan. All in all, the global market leader expects to achieve the targets originally set for 2022 as early as this year.
In order to remain on a sustainable growth path, Holcim is also relying on acquisitions. Eight acquisitions were made last year alone. In January of this year, the Group secured a deal worth billions in the US with the acquisition of roofing systems supplier Firestone Building Products. And that's not all: the aggregates and ready-mix concrete business is to be strengthened with around ten smaller acquisitions in 2021. Here, too, CEO Jenisch has already made a find and recently bought a Greek subsidiary of competitor HeidelbergCement.
In line with the operating business, the share price is also on the rise. Since the turn of the year alone, the price of the SMI member has risen by more than a tenth, outperforming the market as a whole. Over the course of a year, the gain has been as high as 52%. The Corona crash from last year was thus fully recovered. The upward movement ended temporarily in the resistance area of CHF 55/60, which dates back to 2017 and thwarted further progress for more than 12 months before a downward trend reversal was initiated. The price decline only came to a halt in March 2021 at just below CHF 30. Currently, the Holcim share is in a stable upward trend channel. In addition to the lower boundary of the corridor, the stock is also supported by several horizontal supports. In addition, the 100-day line, which runs just above the CHF 50 mark, provides protection against major setbacks.
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