Our Investment Thesis for Holcim Is Playing Out Following Strong Q1; Shares Remain Discounted

Narrow-moat Holcim exceeded company-compiled consensus estimates, reporting first-quarter revenue and EBIT growth of 20% and 16%, respectively. Growth was driven by price increases of 11% and a double-digit contribution from acquisitions within the building solutions segment, which are less energy-intensive than cement production. Like-for-like revenue guidance was upgraded to 8% from 6% and is expected to be at least 10% after including the contribution from acquisitions, due to stronger pricing and better-than-expected performance from recent acquisitions. The shift in business mix and ability to raise prices to offset inflation confirms our investment thesis, which combined with the group’s shareholder-friendly capital returns, we believe will lead to attractive shareholder returns. We reiterate our CHF 56 fair value estimate and view shares as undervalued.