Holcim lifts guidance again on strong demand

Holcim raised its full-year guidance for the second time this year after robust demand for more sustainable building materials saw third-quarter profit beat expectations.

The Swiss cement maker said Friday that it now sees full-year growth in recurring earnings before interest and taxes of up to 12%, from a previous estimate of 10%. Sales are forecast to increase by about 5%.

"This is a strong performance in the face of challenging markets," said RBC analyst Anthony Codling. Shares gained as much as 6%, the most since April.


The company's bullish outlook follows a 17% jump in recurring Ebit in the third quarter to 976 million Swiss francs ($1.2 billion), topping an estimate for 946.7 million francs. Increased customer demand and cost discipline helped drive the momentum, chief executive officer Miljan Gutovic said in a statement.

Holcim's outlook underscores how the company's suite of products with a lower carbon footprint have helped it avoid the growing pressure on the construction sector from higher energy costs. Infrastructure build in Europe is also accelerating and a surge in residential building permits are also seen underpinning its business.

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Holcim is ramping up the usage of alternative fuels which is helping offset rising energy prices, Gutovic said. In September the company posted a record in the usage of alternative fuels in Europe, well above 70%, Gutovic said in an interview. He aims to turn that into 90% by 2030.

"We are less exposed to volatility and significant cost increases when it comes to energy prices as a result," he added.

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Rising Costs

Still, higher input costs will impact pricing next year, Gutovic said. "We are entering into a phase where we are talking to our customers about price increases for next year."

Germany, Greece, Romania, Spain and Switzerland led sales growth in Europe, while Latin America also saw net sales increase. Sales in Asia, the Middle East and Africa declined in the quarter. "Fears of a potential downward revision had flared up recently and proved unfounded, so today's solid third quarter and guidance hike should be taken positively," according to Vontobel's Mark Diethelm.

In the first half of the year, Holcim closed 10 acquisitions and is set to continue to invest in bolt-on purchases. Gutovic said previously he aims to announce roughly 15 acquisitions by the end of this year.

Earlier this year, Holcim bought part of James Hardie Industries Plc's European business for 840 million, expanding its building, sustainable flooring and walling solution offerings.