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Holcim Ltd HOLN

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Morningstar’s Analysis

Currency in CHF
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Holcim Raises Profit Guidance for Third Consecutive Quarter; Stock has Upside at Current Levels

Matthew Donen, CFA Equity Analyst

Analyst Note

| Matthew Donen, CFA |

Narrow-moat Holcim managed to push through price increases, which supported third quarter organic revenue growth of 5% and helped offset inflationary pressure. A positive price over cost spread in Q3 allowed management to raise full year EBIT growth guidance to at least 22% from 18%, having already lifted guidance in the previous quarter. We believe shares are trading at attractive levels and we're maintaining our CHF 56 fair value estimate. The current share price implies an Enterprise Value to estimated 2021 EBITDA multiple of below 6 times, a discount to historical average. We believe share price underperformance is due to ESG concerns surrounding Holcim’s large cement business, which is a notorious contributor to carbon emissions. Portfolio management has helped reduce the revenue contribution from energy-intensive cement operations.

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Company Profile

Business Description

LafargeHolcim is a global manufacturer of construction materials such as cement, aggregates and concrete. The company is the result of a merger between Lafarge and Holcim, completed in 2015, which created a leader in the building materials sector. LafargeHolcim has a global presence, operating in over 70 countries with 72,000 employees. The company also has significant investments in ACC Limited and Ambuja Cement, two major cement players listed in India.

Zurcherstrasse 156
Jona, 8645, Switzerland
T +41 588585858
Sector Basic Materials
Industry Building Materials
Most Recent Earnings Dec 31, 2017
Fiscal Year End Dec 31, 2021
Stock Type
Employees 67,409