With an increase of almost a third, the Holcim share made it into the top 3 in the SMI ranking in 2024. At first glance, this strong performance may seem surprising, as the global economy is struggling on many fronts. However, the world's largest cement manufacturer seems to have made the right adjustments. Even though sales recently declined slightly, the Group reported record profitability in the third quarter. In addition, an eagerly awaited overseas IPO worth billions is currently in the pipeline. Holcim is planning to list its US unit on Wall Street in the first half of the year.
The building materials group, which was founded in 1912, will no longer hold a stake in the new company, whose name has not yet been revealed. Holcim shareholders will become shareholders. In addition to cement and aggregates, the US division also offers roofing materials and is therefore disproportionately profitable: in the third quarter, an operating margin of 31.8% was achieved on the other side of the Atlantic, which was not only 8.3 percentage points more than in the Group as a whole, but also an improvement of 320 basis points compared to the previous year. The division also made the highest contribution to the Group result (see chart). The new company is to be headed by the current Holcim President Jan Jenisch. Holcim shareholders still have to vote on this proposal in particular and the spin-off in general at the Annual General Meeting on May 14. The Zug-based company is not only seeking a listing for the division in New York, but also an additional listing on the SIX Swiss Exchange in order to accommodate European investors. According to Reuters data, investors from Holcim's home country hold almost a fifth of the company's shares. The spin-off is expected to take place at the end of the first half of 2025.
The operational outlook for the North American business, which according to earlier company statements could reach a capitalization of more than USD 30 billion, is rosy. The company is currently involved in the execution of more than 150 infrastructure projects and is expected to further expand its margin in 2024 as a whole. This also applies to the Group as a whole. Although Holcim lowered its sales forecast to a "low single-digit percentage" after the first half of the year, it also increased its return target. Instead of the original 18%, an adjusted operating result of more than 18.5% of sales is to be achieved. The Group also has a "green thumb". The proportion of recycled building materials is to increase to 10 million tons, which corresponds to an increase of one fifth compared to the previous year.
The current profit strength of the building materials group is due, among other things, to its increased focus on higher-value products. For example, Holcim recently sold more of its more profitable low-carbon cement and roofing products. Profitability was also boosted by acquisitions. The company acquired 6 additional companies in the course of the third quarter, bringing the total number of acquisitions to 17 as at September 30. In terms of figures, the adjusted operating result from July to September rose by 4.6% to a record CHF 1.67 billion, compared with analysts' forecasts of just CHF 1.65 billion. In terms of sales, however, Holcim missed expectations, generating CHF 7.12 billion instead of the estimated CHF 7.19 billion. "Our results for the third quarter confirm Holcim's strong earnings profile, with broad-based growth drivers delivering record recurring EBIT and a record margin," said CEO Miljan Gutovic, expressing his satisfaction with the business performance. There is no precise forecast for the current year yet, but a slight recovery in the housing market is expected, supported by anticipated interest rate cuts. The Management Board is expected to reveal more details when it presents its annual report on February 28.
The Holcim share has been on an upward trend since October 2022, which initially peaked at CHF 92.76 in November last year. Since then, the share price has consolidated at this level. With a new bonus certificate, investors are ideally equipped for when the SMI member picks up speed again. The product combines security and the chance of outperformance in equal measure. Even if prices rise slightly, the certificate promises an attractive profit at maturity in three years.
The product structure enables investors to participate in a positive price performance from the bonus level at 100% with leverage. The participation rate is 150% and has no upper limit. Consequently, the certificate has an unlimited potential return. In the event that the Holcim share trades below the starting level at the end, the investment does not automatically end in negative territory. This is ensured by the barrier, which is drawn in at 69% of the starting level. Only if this barrier is touched or breached can there be losses.
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