Holcim Earnings: Raising Our FVE Following Holcim’s Strong Start to the Year and Upgraded Guidance

Narrow-moat Holcim has started the year in the same manner it left off in 2022, outperforming its own expectations and raising its full-year guidance. First-quarter organic revenue growth of 8% and a healthy order book for infrastructure projects has given management confidence to raise its full-year revenue growth guidance to above 6%, an increase from initial expectations of between 3% and 5%. Organic EBIT growth of 8% has been supported by strong pricing and some easing in cost inflation. Following the divestment of its cement business in India and the rapid growth of its roofing segment, Holcim’s end market exposure to repair and maintenance and activity has increased, which is less cyclical than new residential construction. We raise our fair value estimate to CHF 60 per share from CHF 56 to account for the strong start to the year and raise our EBIT margin outlook to 16.5%, an expected increase of 20 basis points compared with 2022 and in line with management's updated guidance of above 16%. Shares are fairly valued.