Transformation in Holcim’s Product Mix Continues To Pay Dividends Following Record 2022 Print

We were not surprised by narrow-moat Holcim’s full-year performance, which exceeded management’s upgraded guidance provided last quarter, and thus maintain our CHF 56 fair value estimate. Organic revenue and EBIT grew by 13% and 7% respectively, which given Holcim’s shift in product mix toward materials with lower capital intensity, unsurprisingly sits in the middle of the pack between heavy building materials manufacturer HeidelbergCement and downstream producer Saint-Gobain. However, the group was more upbeat in its outlook for 2023 than peers, guiding for organic revenue growth between 3% and 5% and an overproportional increase in profit. A dividend of CHF 2.5 has been proposed, an increase of 14% year over year, and confirms management's confident outlook. We view shares as fairly valued and maintain CRH as our preferred pick in the sector.