Heidelberg Materials Earnings: Full-Year Revenue Growth Guidance Unchanged, Still Looks Achievable

While the first quarter is the least material for building material manufacturers, it is noticeable that Heidelberg Materials underperformed its narrow-moat peer Holcim on both the top and bottom lines. Heidelberg reported an 8% decline in organic sales during the first quarter, compared with flat sales for Holcim, which we attribute to Heidelberg’s tougher comparable versus the prior year and Holcim benefiting from a recovery in its roofing business. Heidelberg maintained its full-year guidance of like-for-like revenue growth and EBIT growth between 0% and 9%, which we view as achievable, but this remains lower than Holcim's and CRH's outlooks. Heidelberg’s investment thesis revolves more around capital return, having announced a EUR 1.2 billion share buyback through 2026 and a 15% dividend increase to EUR 3.00 annually, which combined equates to 10% of the group’s market capitalization. The shares are currently trading at a slight premium to our EUR 84 fair value, which we maintain.