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Holcim's Newest U.S. Plant Illustrates Cement Economics

Companies can choose to maximize margins at the expense of higher capital costs.

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Earlier this year, we traveled to St. Louis to participate in Holcim's investor event and tour of the Ste. Genevieve cement plant. Ste. Genevieve is one of Holcim's roughly 100 cement plants. Presenters included CEO Markus Akermann, CFO Theophil Schlatter, and Benoit-H. Koch, member of the executive committee for North America. Given the fact that the largest cement companies we cover have hundreds of operating locations, analyzing the firms' financial statements and the economics of the underlying businesses can become a cloudy, abstract process. However, visiting a single cement plant gave us detailed insights into the key drivers of profitability. What we learned re-emphasized our inclination to examine not only cement producers' operating margins as a measure of profitability, but also their returns on invested capital.

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Elizabeth Collins does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.